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?

I work about 40 hrs pw; sometimes less, sometimes more. On top I do about 15 hrs family/domestic stuff pw and have six hours of paid help. Plus we have a gardener and odd job man about four hours pw on average. DH used occasionally to do 100 hr weeks but in four to six hour bursts. We holiday completely in August, Feb half term, Easter week and whit week. I have two weeks at Christmas. I work just sub full-time because contractually I have an additional ten days' holiday under a flexible working agreement.

DH nowadays works about 60pw but is winding down a bit in his mid fifties. We are both contemplating doing less because we are tired and I haven't been awfully well since the summer. Not really serious but we would like to be semi-retired in the next five years.

Our DC have almost completed full-time education and we want to spend more time abroad.

We appreciate we have been very lucky along with hard work.

Also part of this thread was about pension tax relief going, it isn't, the well paid benefit greatly from these tax breaks too!

Oh, and I don't resent anyone having good fortune. I truly believe there has to be a safety net for those who suffer misfortune but I think as a society we need to be a bit more pragmatic about guiding young people to make sensible choices. Poor choices lead to hard lives and it breaks my heart to live in a world where the people who are in positions of responsibility and who could give sensible advice are shackled by political correctness and fear of offence.

Higher rate tax payers can get a nice warm glow from the knowledge they're rightly paying an appropriate amount into the pot!

It would be nice wouldn't it? Alternatively they can dwell on how unfair their high earnings make their life and become bitter and resentful about the crumbs falling on the floor for the poorer off to pick over.

Or they can realise that they contribute to the society that has made it possible for them to succeed. But no, they earned it all, and deserve to keep it all, and get a bit of help from the state too.

Muppets.

I'm assuming 100 working week is temporary, few two parent families would be doing 100 hrs a week each in my experience and would be too tired to make number 3 anyway

And yes I have been in the position of working too many hours to be arsed to do any cleaning or prioritised playing with child instead. Still couldn't afford cleaner (or a coffee machine) - and yup still survived without both (tip: lower your standards)

I can see that you believe cleaning, laundry and coffee machine are essentials. I'm just pointing out that I managed without in a pressurised professional job as a single parent and managed without ergo they can't be "essential".

I have never claimed childcare wasn't an essential.

*I'd much rather earn £50k + without CB than £17k with CB

For larger families, eg 4 or more DCs, when you include tax credits and housing benefit, the difference in actual income between those two salaries is a lot smaller than you'd think.*

I said this a couple of days ago and seeing as this thread is still going, I have now run the figures through entitledto and listentotaxman for families with one earner on £17k or £50k.

Both families rent and have a SAHP, have no disabilities or childcare costs.

The total income for the family on £17k including over £12k per year in tax credits and nearly £10k pa in HB is a shade under £40k pa.

The total income for the £50k pa earner, including, surprisingly £3.5k pa in HB (I said that the family lived in Bromley, somewhat randomly as somewhere that is in outer London so mid priced?) and CB but no other benefits as a shade over £43k pa.

So for a salary that is on paper nearly triple, the family sees less than £300 pm or about £3200 a year extra. This would be even less if the higher earner was paying off a student loan.

So for families, those on seemly high salaries aren't necessarily rolling in it compared with lower earners.

Barbara it would be interesting to do the comparison for an average size family - I suspect the difference in disposable income would be a lot bigger.

Also worth bearing in mind that while high earners may experience some "treading water" between £50k and £60k, recipients of tax credits will also experience very high withdrawal rates as their income rises.

So to answer the question of the thread, there is a point then, 3.5ks point when assessed with a very specific and rare set of parameters with most likely larger benefits for the average family.

You do lose a huge amount of earnings in tax .

But you get an 80k bonus and still get just over 40k. As a bonus.

And stuff like that. Totally worthwhile.

Agree Misti, I would have liked to see it done with a family with 2 children tbh.

More children = more tax credits for the lower earners, and most people don't go on to have lots of children that they can't afford.
Larger families aren't the norm in that wage bracket I wouldn't think.

The benefit of earning over £50k is that you are earning over £50k.
You won't lose any of that as your children grow up because it is yours and not a benefit payment, and presumably your wages wouldn't just stop dead at that point.

Agreed Bunny, too much of the short term green eyed monster going on here.

Anyone earning £50k should think themselves very, very lucky.

I consider myself to be very lucky and doing well, as I earn £50k. I am a single parent with one DS, living in the NW, so don't have crazy mortgage payments like those in London or the SE.

I have no issue at all with the tax that I pay. The more I earn, the more I should contribute. I won't lose a massive amount of my CB, but as I get pay rises, then I expect it to be reduced. It's £82 a month, so in the grand scheme of things, it's not a huge amount of money.

I used to be in a higher paid role, but it involved very long hours and lots of travelling. I took a pay cut for this role, which is local and I am home by 6pm each night.

I don't have a degree and came out of school with 1 'O' level. I have worked my backside off to earn the money I do, but I still realise how very lucky I am to be earning my current salary. I have no issue at all paying the amount of tax that I do, as I know it contributes to helping others who may not be as fortunate as myself.

Anyone earning £50k should not be complaining - even those who live in the SE - you could be earning a lot less.

I posted the numbers to illustrate the previous point I made.

The tax credits window was still open so I tweaked the figures a bit to a family of 4 living in a 2 bed council house in Leeds.

£17k family have an income of £26k and £50k family have an income of £38k so yes an extra £1k per month which will make a big difference to their quality of life but the after tax and benefits entitlement is much smaller than the initial nearly 3x salary difference would suggest.

"but the after tax and benefits entitlement is much smaller than the initial nearly 3x salary difference would suggest"

No you have manipulated this for your own ends by going to the monthly figure of 1k, annually its 12k which is far, far more. Which is the equivent of more than half the annual median salary in cash, and half of what the lower earning family get in earnings + benefits (not all of which they will see in cash). A big difference and definately worth it.

What's instructive about barbara's example is how much money a family of six need to live on in the London area. I would think that neither family in her example would feel rich. The difference is that the family on £17k would most likely have little or no spare cash beyond that necessary to pay basic bills and living expenses; the £50k family would at least have £300 spare a month if the shit hit the fan.

and if the shit hit the fan, the benefits would kick in, wouldn't they!

lurked I was talking about unexpected expenses not losing jobs, though you'd hope that a family with £300 spare a month would have a little more scope to put something aside in case of unemployment.

But as others have said, it's a rather artificial example.

I think you tend to spend what you have, £300 "spare" a month doesn't add up to much when you think of extra curricular activites, ( gives DD2 a glare having had an argument regarding music practice tonight).

I think there is a real divide between London and other areas. My PIL recently sold and bought in another area of the country, about 75 mins from London. For under £350k they got a large detached 5 bed. My small 3 bed London house is worth (a lot) more than that. They had 4 children. I'm stopping at 2 because childcare costs me so much from my healthy income. We couldn't manage our mortgage on 50k p.a.. In fact 50k p.a. probably wouldn't really cover my full time childcare either. Crazy world.