To think more than 1.6mil ppl are on £80k if mumsnet is anything to go by?!?

[KimchiLaLa]

www.google.co.uk/amp/s/amp.theguardian.com/commentisfree/2019/nov/22/question-time-80000-super-rich-earning-workers

This article is saying 1.6mil ppl are on 80k. How is that possible when a salary thread comes up on mumsnet, practically everyone claims to have a 100k plus salary?!!

I see this morning there’s a thread, “How much do you spend in your DC at Christmas.” It will be the same thing. Some people will make come on because they want to regale with hoe they only spend 50p and make gifts out if fir cones. Then inevitably, someone will come on to be honest that they spend however many £ thousands and will be accused of “(not so) stealth bragging”, “lying” and “ruining the environment.” Well why ask the question in the first place then?

Xenia - please dint turn this into another SAHM thread! Of those there are quite enough, thanks (and you do realise sex is a two way thing and many SAHMs have cleaners)?

I have a degree and a good NHS job, DH has a well respected job and combined we earn less than £60k (both full time). I would only know a handful of people at a guess who earn more than £80k alone. North East England. Not known for being a particularly affluent area by a long stretch but we get by just fine.

@Xenia
As a feminist I am not that happy about women showing off about what their husbands earn - all they are really saying is they choose to provide sex, cleaning and childcare services in return for perpetuating a sexist norm and presenting to their children that women serve male needs and men earn.

That's not what they are saying at all ffs.

I always find it amazing how these big earners can spend so much of their very busy lives posting on a forum!

Most people on here seem to live in London, that the best paying jobs and highest earners are often based there. Not everyone in London is a high earner.

Generally people of similar earnings level mix with others at the same level of affluence, so this is probably why MN is really unrepresentative of the whole of the country.

I know several people with a salary of around £11k who are taking dividends from their ltd companies of well over 80k. It's legal.

I presume bonuses work the same, in that they aren't counted as salary for these figures but I don't know.

I know several people with a salary of around £11k who are taking dividends from their ltd companies of well over 80k. It's legal.

I presume bonuses work the same, in that they aren't counted as salary for these figures but I don't know.

It's not 'salaries' it's 'incomes'. The 5% over £80k is based on all income reported to HMRC. That would include all dividends received, and any bonuses, second jobs, earnings from property, pensions and any other taxable income.

Earnings through dividends are effectively taxed twice now anyway, as well as the company's profits being taxed to start with there's dividend tax payable by the shareholder in the circumstances you describe.

The 5% over £80k is based on all income reported to HMRC

Is this true? Because the perception that a lot more than 5% being on more than £80k seems to stem from the idea that high earners are not counted as we're only talking about PAYE income so their income is not included, or it is manipulated to make it look lower. But like you say, I also thought that a lot of the 'dividends tricks' had been outlawed now?

As a feminist I am not that happy about women showing off about what their husbands earn

My DH earns

£90k p.a.
£130k p.a
£25k p.a
£55k p.a
£170k p.a
£40k p.a
£210k p.a
£650k p.a
£60k p.a

It's one of those. Do you want to enlighten me as to which of those are me showing off, as opposed to simply stating fact? Is there a certain level where it's just a salary, as opposed to me staying at home whilst he does the "man's work"

Mumsnet does seem to have a ' middle class' vibe and when money threads come up I'm amazed at the figures people earn. I know a few may lie etc, but I do believe there a lot of professionals that do earn a huge amount on here.
My dh has worked for the same company since 1979 and has a degree is ' middle management ' I guess you would call it and he is on a lot less than 80k. Some of his colleagues earn more than him and one is on about 120k but he doesn't consider himself ' rich' at all! It's mostly overtime that bumps this up though and he does have a specialist job.
I earn a pittance , but then I work less than 10 hours a week and will never earn big bucks even if I did work full time.

I wonder if we'll reach the stage where it's more MN to post about how many alleged high earners and their spouses there are on here than it is to post about actually being one.

@BarbaraofSeville The figures are from HMRC's income statistics, they include all declared income.

The situation with dividends would distort the figures a bit though.

Take a freelancer with a notional income of £100k (and no IR35 complications).

He draws £8,632 as salary.
The company pays £17,359 tax.
He draws £74,009 as dividends.

His taxable earnings on the the £100k he's earned are recorded as £82,641. He then pays £13,270 dividend tax, leaving a total take-home pay of £69,370 from his £100,000. Total tax paid between him and the company is £30,629. No NI to pay and the 'director' gets an NI credit as a low-paid employee.

If he received his earnings as a normal PAYE earner his employer could pay him £88,912 (the extra £11,078 goes to HMRC for employer's NI) and he'd have £60,103 take home pay - £9,267 less than using the Dividend/Salary split.

So under the first scenario his income is recorded in the stats as £82,641 but he comes out with £69,370. Under the second scenario his income is recorded as £88,912 but he comes out with £60,103.

@baloneyInMySlacks is this true? How do you know? The article switches between talking about salary and income.

Of course the other popular tax dodge seems to be "employing" a partner and paying both of you a wage of 50k instead of 100k. Which again would confuse those figures.

I'm not disputing your comments about taxing dividends btw. I'm new to this, run a very small business and find it all very interesting.

“As a feminist I am not that happy about women showing off about what their husbands earn - all they are really saying is they choose to provide sex, cleaning and childcare services in return for perpetuating a sexist norm and presenting to their children that women serve male needs and men earn”

Xenia, do you not think that attitude is a bit “feminism for dummies” in this day and age?

There does come a point when there is no practical sense in having both partners working full time. For instance, what is the point of a wife going out to work full- time for say £50k, when the DH regularly makes or loses multiples of that amount on the City Index during the space of breakfast? Day in day out. It’s not worth the hassle of having to employ childminders and the associated headache that comes with that because the extra money would be so marginal. There’s nothing “feminist” about living an unnecessarily stressed life just to make a point. Someone like me, who has four DC, it just wasn’t really practical. I could have earned a good salary yes, but I’m not in finance and don’t have a business mindset so it was never going to be stratospheric. Our kids see that we work as a team in their interests. Because that’s what it’s all about ultimately. I know a few couples where it makes sense to have the DH stay home for the same reasons. My DH doesn’t work “full time” any more really, but there was about fifteen years when he had no cut off between work and home life. I couldn’t tell you what his “working hours” were - maybe the hours he was t asleep? It is what it is. Anyway, nothing is fixed in stone. Many long-term SAHMs use the time to retrain in something they actually find interesting and find a new path as the kids get older / leave home. It’s not a bad model for DC because they have the sense to understand that families have different choices.

Thanks Balony. So the short answer is that there aren't armies of non PAYE people earning significantly more than £80k and the statistic that 'only 5% of people earn above £80k' is broadly correct.

I don't think it would be helpful to the thread if it went down the debate I just started. I thin kit is better for women longer term if they earn their own money and politically better for women's rights, and women advancing in careers so that if anyone has to give up work it should be the man just until we achieve more equality and close the pay gap.

Going back to the dividends issue a lot of the advantages of the self employed having a limited company have gone due to 2016 divdend tax changes (in terms of tax anyway ) although as said above there can be some tax advantage too and particularly if you can divide income between a non working spouse and the worker.

Someone about talks about tax on bonuses. Bonuses tend to be paid to PAYE employees so no they will not be tax free. One reason we have never had in British history so much income tax paid by higher paid workers is because of the combined marginal uppoer 47% tax/NI rate on many highly paid workers' bonuses. You get a £100k bonus and the state keeps about half of it. The state takes about half away and another 9% (of income over £25k) for good measure for those with student loans under the new system.

@GabriellaMontez it's specifically HMRC figures for incomes, not for earnings. www.gov.uk/government/collections/personal-income-by-tax-year

So the short answer is that there aren't armies of non PAYE people earning significantly more than £80k and the statistic that 'only 5% of people earn above £80k' is broadly correct.

I can only go by the figures published by HMRC but there's no reason to doubt that.

There used to be something called “entrepreneurs relief” on any dividends following the sale of a ltd company. I’m not sure if this is still the case, but it was something like you had to own at least 5% of shares in that company to be eligible for only 10% tax on any income from the sale. I could have the threshold wrong, but it was something like that.

Those that had less than the threshold level of shares would maybe have the shares in the name if another company so that they only paid corporation tax on the amount. So rather than say, £10 million becoming £5 million after income tax, they invest the full amount long term and can take any interest on it as income.

This constantly repeated chorus that everyone is entitled to their opinion is infuriating. Nobody is entitled to an opinion on something they know nothing about.

Yes they are. But they're not entitled to have me listen to it, care about it, not take the piss out of it, or give it the same validity as someone who does know what they are talking about.

Everyone is entitled to an opinion, but not all opinions are equal.

@Lifecraft Yes, very interesting my love, now you've got a tray of buns out the back need icing, so fuck off and do your job, and let the grown ups talk.

@ EntropyRising Wow.That is astonishing.

Really...how did you think the buns got iced?

cosima, that is about capital gains actually. Many small businesses like mne will have no resale value so would never be "sold off" for a profit but some can be. That is not the same though is it as taxing people's income.

So if you sell shares you won whether in british telecom of Fred's garage which you and your husband own that is a different kind of way of making money same as if you sold a buy to let flat or a painting - you are taxed on the capital receipt and capital gains tax rates vary depending on the type of thing sold. It is a tax on the gain so if you sell for less than you bought the business for there is no gain to tax.

If you make a profit then Eg if you sell a property other than your home the rate is 28% less a special annual allowance and your acquisition costs. If you sell other items it is 20% (there are lower rates for smaller gains too).

However if you sell shares in a business you have run and meet other conditions and are under a maximum level you pay the 10% you mention. The reason it is 10% not the usual 20% capital gains tax is to encourage people to create jobs and found companies which can be a very risky business with a lot of liquidations and bankruptcies out there.

2020 will be interesting once IR35 kicks in, my OH is a limited company and contracts on a daily rate, we're waiting to see the impact on the availability of contracts going forward. I'm currently PAYE and have been for a little while after 6.5 years of contracting.
If it all goes belly up in the UK we'll look at going offshore again back to the Middle East (most likely). Zero tax and even with the introduction of 5% VAT it's still a more preferable position now that rent prices have reduced by circa 30% in the last few years.

Yes. Those changes do not affect people like I am sole traders (and I do work for at least 30+ people a month so clearly self employed even if I were trading through a limited company) and I pay as much tax (a lot more actually due to high turnover) than were I employed. Those who contract to one entity only for a period whose customers are large companies (the new rules do not apply to those contracting to small ones) would need to show they are genuinely self employed.

If you are a plumber with a daily rate and see all kinds of customers even huge ones and even if you have a limited company would would still be outside being treated as employed and rightly so. It is those people with one customer for a period where it can be less clear. There have been a series of recent cases some of which HMRC has won and some not depending on the particular case - several invovling people working in the media - the last one I looked at the lady won as she was clearly self employed.