Higher tax rates are disincentivising work Research by Policy in Practice finds that about 120,000 households are paying more back in tax and the clawback of benefits for every extra pound they earn above £50,270 due to the "absurd" way welfare payments, including child benefit, are withdrawn for higher earners. But the number of families affected could rise by thousands by the next election, the think tank has warned. It said the Chancellor's decision to freeze the level at which workers start paying 40% income tax at this level until 2028, as well as the thresholds at which child benefit starts and finishes being tapered away, means 180,000 families who also qualify for universal credit face effective marginal tax rates of 103% within five years. Deven Ghelani, director of Policy in Practice said the policy was sending a message that "work doesn't pay", adding: "This policy means every family with children on £45,000 is having to think harder about whether or not they want to work more."