To be unsure whether this is fair or not - Greggs bonuses?

[coffeeforone]

I realise that it will only be a small proportion of Greggs workers who are unfortunate to fall into the 'will only receive £75 out of £300' category due to the tax and loss of universal credit, but I'm quite torn on whether this is fair or not?

www.bbc.co.uk/news/uk-politics-51208542

Tax aside, of course UC will be reduced for if they are paid more, that's how the system works, it seems unfair at an individual level but the system overall I don't think is unfair.

E.g. If the same individuals worked enough overtime to earn an extra £300 then that would be the same outcome? Why the headline about bonuses?

Thanks for the replies, I think many have explained what I was thinking but wasn't 100% when I read the article, it is fair that the UC is reduced.

I actually don't know too much about UC, but I've also heard that one of the issues is the lag in calculation and drop in benefit, so for example the Greggs workers may get and spend their £204, but in the next month not have enough to pay the bills as no bonus and the corresponding drop in UC. Obviously their own fault as they knew this might happen and shouldn't have spent it all but you can imagine people who haven't budgeted for the drop being in a difficult spot.

The fact that it’s a bonus is Irrelevant really.

The question comes down to do you think our current tax structure is fair. I don’t, I think universal credit should be cut at a slower rate to encourage more people who are working.
But that’s just me.

It's shit. And keeping less well off workers firmly in their box.

@FoamingAtTheUterus my DP got an 8k bonus and saw a quarter of it. He's not a huge earner. It's nothing to do with keeping low earners in their boxes. Don't be ridiculous.

Whether you think it is fair to tax bonuses is another question. If bonuses were not taxed, they'd be used to avoid paying tax, in that companies would pay small salaries and large bonuses.

Bonuses also include those of several thousand in many corporate companies, and even more for some City bonuses. If you were going to remove tax, it should be capped at £1000 or something, so any bonus over that is still taxed - unless people put it straight into pension.

As a previous poster said, it's always possible to put the bonus into a pension and pay no tax. My workplace would also offer the 13.8% employer national insurance on top of a bonus if you wanted to put it in your pension, so you would actually end up with £341 going to your pension and no tax bill!

But of course, you current finances would need to be in order before you do that. For many people claiming UC I suspect they might take £75 now rather than £341 into pension.

my DP got an 8k bonus and saw a quarter of it. He's not a huge earner.

Really, that sounds wrong! I'd get him to check that!

@coffeeforone it's not wrong. He did put some into his pension, granted, but still lost a lot to tax. It's just the way it is unfortunately.

Obviously the bigger the bonus the more the tax deduction is.

If he's not a big earner (over £100k) then the tax deduction should have been 42% as a maximum.

giveherhell

Dh got a good bonus but only lost half of it...three quarters does seem too much

@JoHarrison Your husband should have pensioned off the amount that put him over threshold and kept the rest. Also a little unfair that you think the Greggs shop workers haven't contributed to the business success!

I don't think Greggs is a special case, everyone is affected by deductions on bonuses

Well yeah...what coffee said, nearly half...

@GiveHerHellFromUs I mean he should have seen at least 58% of the proportion he chose not to put into a pension.

If he's not a big earner (over £100k) then the tax deduction should have been 42% as a maximum.

Plus student loan deductions?

Plus clawback of child benefit if earning over £50k?

Plus workplace pension deductions?

62% if earning over £100k

There are a lot of points on the income scale where "deductions" are a lot higher than the basic tax/NIC rates.

I think it’s fair

I think it's perfectly fair. I've only been given a bonus once - for completely graduate development - and of course it was subject to tax, and pension, student loan, and everything else that comes out a pay cheque before you get it. Sad, but that's just the way it goes. Why should it be any different for them.

I don't really see what the problem is. Surely we should be reserving benefits for those who really need them and to the level they need them, so that there's enough government money to spend on other necessary things, like schools and the NHS.

@Kazzyhoward

Apologies, you are right, there are other factors i missed.
I didn't count the potential to lose child benefit and the extra student loan deduction (though i do see it as a positive thing if it is repaid quicker).
I was also of course assuming that 'not huge' earnings mean under £100k!

From memory of the times I used to get a bonus,

best part = the letter saying how much
worst part = your wage slip & seeing how much tax you pay that month.

I think a lot of people don't understand taxes. Some people assume that because they take home 2k on a salary of 30k if they earn 60k they will take home 4k. They also often forget that there will be very little benefit help at 60k that they may have got at 30k.

I feel the whole universal credit system is unfair. Even IDS when he brought it in had an intention to 'make work pay' and intended people to keep a higher proportion than 37p in the pound.

People earning under minimum wage will get their full bonus as they're compensated as if on minimum wage for their alloted hours. (Minimum income floor)
Those earning above the minimum income floor will be hit hardest..

"I feel the whole universal credit system is unfair. Even IDS when he brought it in had an intention to 'make work pay' and intended people to keep a higher proportion than 37p in the pound."

I guess the big question is what rate does the average person think is fair?

I think a lot of people don't understand taxes. Some people assume that because they take home 2k on a salary of 30k if they earn 60k they will take home 4k. They also often forget that there will be very little benefit help at 60k that they may have got at 30k.

This is so true. I have worked processing payroll for many years and when you look at a of long list of salaries (ranging from say £20k to £50k+), the final monthly net pay list there is really not the vast variation in net take-home pay that some might expect looking at the gross amounts.

I don't think Greggs is a special case, everyone is affected by deductions on bonuses

Greggs isn't a special case, but what makes it different is that many low paid jobs, of the type that most Greggs ones will be, never get any bonus at all.

Ha, I've worked in payroll too @coffeeforone when I was younger. I remember being surprised that 100k bought home 5.5k & 2 earners on 50k bought home 6.2k.

Greggs do not pay above NMW, I thought that was off when I read it so googled and they definitely don’t... I worked for them years ago as a student and it was the worst job I ever had, a truly awful company to work for.

Anyway, bonuses are always taxed, it’s just the way it is.