To think there is very little benefit in earning more than 50k

[ReallyTired]

Loss of child benefit and now reduction in pension tax relief makes hardly worth bursting a gut to earn over 50k. People who earn just over 50k are generally the work horses in skilled jobs that ecomony needs to grow. Given that such people will be saddled with high student loans in the future, what will senior teachers, doctors gain from all their hard work?

There are tax and benefit traps at all levels of income, and someone who is earning £50k has more flexibility to avoid or minimise the trap than someone on a low income.

Ideally tax/ benefit traps (where you take home less, or barely any extra, by earning more) shouldn't exist at all but in practice they are surprisingly difficult to eliminate. And this is true not just in the UK but abroad too - my DH has an effective revenue cap on his French small business because it he exceeds it even slightly we would lose thousands.

We own our own business and are employees of it. Remuneration is a mixture of salary and dividends.

We choose to keep within the lower tax bracket even though we could easily pay ourselves six figures. We would lose loads to income tax, mess up our child benefits and anyway we don't really need that kind of money. So the rest of our profit just stays in the business pot, for a time when we want to scale back our efforts.

I agree with the OP point of view, although I also agree there are worse positions to be in!

If I worked full time I would earn close to £60k, however I decided to take a 20% cut and work 4 days a week. Although this is a 12K pay-cut, due to the tax/CB withdrawal in this band my net income only reduces by about 3.5k (£72 pw). It wasn't worth it for the extra day at home/with the kids, especially when considering childcare and commuting costs.

I consider that the treasury has lost out here as most of my work is exported. Within my peers this is increasingly common, male and female.

As of 1st April I'll be earning £50k and am certainly not complaining as it will mean an extra £250ish per month after tax and pension. It's more than I've ever earned and it's in a job that allows me to predominantly work from home, giving me considerable flexibility for childcare. I'm under no illusions that many people would give their right arm for what I've got. Dh earns half my amount. We consider ourselves comfortable but not rich, which is absolutely fine by us. Our house is nice and in a 'good' area, but we have 13 year old cars and still have to make choices about spending and save for things we want. When I lose child benefit I can't really get worked up about it because I will still take home more than I lose and I accept that we don't really need it, unlike others. What annoys me is where one partner is a sahp and just because the other is classed as a 'high' earner on 50k they lose the entitlement, whereas those where joint income is close to 100k yet they each earn £45k will retain it. It should be judged on household income imo.

I suppose it can be argued that a SAHM can go out to work. I feel sorry for single parents with 3 children who earn just over 50k. I realise the govement did not want the cost of complex means testing, but there needs to be a fairer way of means testing that is still cost efficient.

tbf, trying to say this kindly, RT is a bit of a doom-n-gloom poster.

If I ever get to earn > £50k, I'll let you all know how much I'm suffering for it.

I understand the means testing argument too but surely it wouldn't be too complicated to introduce a per household cap instead.

I'm always amused by the comments that £50k isn't much in London. I know it's expensive (that's one reason dh and I chose to move away) but I wonder if you realise that many people live on considerably less in London?

Overall though op yanbu but there are issues at most levels. The point where people earn just too much to get tax credits is one of them and there are many more. I get what you're saying but I think we have to aim to achieve what we can and not start overthinking things. You may be better off earning £49k than £52k but if it's a job you want and works in every other way then it wouldn't be enough to make you turn it down.
Not sure which teachers earn over 50k.

There is a large marginal tax rate between 50-60k and 100-110k. If you are going to be just in that bracket, then yes, it may not be worth taking the promotion or whatever if it means a lot of work for relatively less money. But in most cases it is a step on the way to higher salary so worth doing.

Not many of the population are on 50k. See graph...

I earn around £45k part-time, certainly wouldn't contemplate going full time to earn £60k, my quality of life is much more important to me.

DH earns quite a lot more than me and has a much less relaxed and happy life as a result, I wish he could find the same sort of balance.

My daughters and I (lawyers) earn over £50k. I agree that just over that and you sometimes can be sensible to avoid the pay rise or have an extra pension contribution instead or in the area where you lose the personal allowance entirely you can be better off refusing the pay rise at all. once you get well over though it is worth it although ecven then as the state in effect steals half of what you earn what is the point in working ove a weekend when half of it is just going to be wasted by useless civil servants and most of the other half will go on indirect taxes when you buy stuff?

We are taxed to the hilt in the UK. We need much much lower and capped flat taxes.
The Tories and Labour seem as bad as each other on tax at the moment. Wet Tories. We will never turn the country around until we come up with much lower more sensible taxation.

Barbara, i can obviously only speak for myself. How people on 20-40k manage will have to be for them to explain. Perhaps they can work from home/work shifts with partners or have family to help with childcare? All I know is that after I pay childcare, mortgage and my student loan frm overseas I struggle for money, every month. I have one dc, would love to have more but I can not afford to. Yes, on 50k but I can not afford more than one child. Money is tight for me, I struggle. As do many of my friends living in London on a similar salary.

Oh dear. Are your diamond shoes too tight as well, OP?

It's not the high earners I worry about.

That's true mother of dragons, but there are some people earning less than 50k who are choosing to do so. There are more people for whom this is a relevant issue than those in the 50k plus bracket.

My husband is not in th 50k bracket. He could earn 55k, but the costs aren't worth it. In many jobs 55k is the top of what ever anyone can earn. It's not a stepping stone on to greater things.

Tax bottlenecks like 50 to 60k or 100 to 110k hurt the ecomony. The less people earn, the less they spend and the less jobs created.

There is a possibility that pension contributions will no longer be tax free.

Paradoxically cutting taxes has increased revenues. This article suggests that the optimum rate would be 36p rather tha 45p for milking higher earners.

blogs.spectator.co.uk/2013/03/celebrating-the-25th-anniversary-of-nigel-lawsons-tax-cutting-budget/

Well, that's Fraser Nelson in The Spectator. Here's an example of what actually happened when high earners' income was reduced and how it was spun by the government:

www.independent.co.uk/voices/george-osborne-claims-cutting-the-top-rate-of-tax-raised-8bn-it-cost-the-country-24bn-and-heres-how-a6905836.html

I haven't read it yet, but here's a link that works for the report that 36p tax is optimum.

conservativehome.blogs.com/files/cebr-report---final.pdf

Cutting the top rate of tax did increase revenues temporarily, but only because high earners who could do so, deferred income until lower rates came in. So there was a loss of tax revenues in the prior year.

It's either dishonest or ignorant to claim otherwise.

I earn more than that, but for most of my life I've earned much, much less and grew up poor.

It is categorically less stressful to earn more.

It's not dishonest and ignorant and we have the example when Lawson brought upper rate dopwn to 40% ( it had been as high as 99% in the 1970s). The tax take went up not just for a year for but for years and years. If tax goes down we are happy to pay it. It's very simple. once you earn quite a bit it's fairly easy lawfully t o pay less but if the rate is fair you don't do things like incorporate or divide your savings between husband and wife and other lawful things which reduce your bills.

Tax is far far too high at present on higher earners and the state is absolutely massive and spending far too much.