High earner query - basically over 100% tax on xmas bonus.

[NameChangeBonus]

My employer has decided to be very generous and give everyone £5k cash bonus this Xmas (in previous years they have given £2k). I have adjusted my salary sacrifice pension contributions so I earn approximately £96k gross. I cannot amend this until April as per my employer policy. I thought there was enough buffer for bonus and benefits.

problem is if I earn over £100k (I have 2 kids aged 1 and 3 in full time nursery)

• I will pay 60 % tax on my bonus
• i will become ineligible for tax free childcare - worth £333 per month,£4k per year
• I will become ineligible for 30 hours childcare for DD1 - worth £600 per month, £7k per year.

basically because I’m getting this bonus we’ll be much worse off financially - is there anything I can do to avoid this?

Do you think some of the batshit advice on this thread is worth getting?

OMG you are so funny. Did it take you long to craft this? BRAVO. Well done. 😳😳😳

@NameChangeBonus Hi OP, just wondering - I thought that if either you or your partner earns over £50,099 then you have to pay tax on the child benefits and the higher you earn it evens out so there is no point claiming. You mentioned that as long as one person in the household earns less than £99,000 then you can still claim. Apologies if I’ve messed it up!

Nah. Just people who, if they picked up £7k a month, would not be on here moaning about a £5k bonus fucking up their free childcare.

I don’t earn as much as the OP but I did get the additional funded hours. Why on earth should I begrudge the OP getting that @SweetFemaleAttitude

Also why do you think she is receiving 7k a month?!

@NameChangeBonus if all else fails open a Vanguard SIPP and chuck it in there in the Lifestrategy 80%. Sorted. Remember to report it on your SATR.

The rule is ridiculous and I’ve yet to find anyone who wants to pay to work. … this is what the Doctors got the pension rules changed for. Ignore the haters.

On that what happened to :

People helping each other ?
People being nice ?
People actually using the site to offer help and advice ?

Maybe they enjoy work? Want a break from their kids?

Anyone over a certain amount doesn't need to ask the Internet for advice. I'm sure they can make use of their company information service about finances, debt and tax. It's ultimately just a brag.

That’s my point exactly.

This was always going to turn into a bunfight. If OP had asked on the money matters board, people who actually knew what they were talking about would’ve answered for her.

So ive got this straight haven’t i

person A earns 94k gets tax free childcare and free hours worth 11k to them. They get a bonus of 5k and is now on 99k and retains the 11k benefit

person B earns £96k…they get the bonus which takes them up to 101k but they lose the 11k benefit which now puts them on 90k

person B is down 9k on person A

i’d find that galling to be honest and i would certainly be trying to mitigate that lose somehow

*A household income of £100,000 is top 7% in the UK @publicopinionssss

Statistically, being top 7% is clearly pretty well off. The OP's family income is higher than this.

Ot doesn’t necessarily make you well off because there are so many variables. Loads of the population don’t have mortgages or have very small ones. Housing costs matter.

Anyone over a certain amount doesn't need to ask the Internet for advice. I'm sure they can make use of their company information service about finances, debt and tax. It's ultimately just a brag.

@Conkersinautumn so what’s the amount?

A brag? 🤦‍♀️

Yes I doubt there is a single workplace where this isn't allowed.

As you decides the rules in any workplaces -the bosses? And do they tend to earn over £100k and want to avoid tax cliffs etc yes they do

I used to email anyone with a bonus each year about adding Ito to their pension and have been contacting the £100k level about the benefits with a spreadsheet example if they wanted.
That's without taking into account the kids factor for sone of them.

Us women should talk more honestly about finances and taxes and it shouldn't be so forbidden to discuss such issues. Must be helpful for others who earn more to see the thread and avoid tax cliffs in future.

Us women should talk more honestly about finances and taxes and it shouldn't be so forbidden to discuss such issues. Must be helpful for others who earn more to see the thread and avoid tax cliffs in future.

exactly

Yes this will mess up UC for a month. Very annoying!

The OP has shared her outgoings and she is clearly not living a life of luxury. The fact is that many people on lower incomes than her will be better off because they don’t have high childcare or mortgage/rent costs.

I don’t earn as much as you but can understand your annoyance. My company awards a pay rise in April but we do t actually get it until months later. Oh good you would think, a nice lump sum. In reality I pay more tax, student loans takes a lot more than usual and I’m no better off.

Do you women getting child benefit not want high earners working and paying tax to pop the fruits of their education and work in to your pockets. So many women here claiming benefits and then getting upset people earn good money. You know you can’t have one without the other right? It should everyone with a good career be skint just so you feel better.

My current company don’t operate the bonus sacrifice. It’s the first place that I have worked that don’t offer this. However, it’s a U.S. company with a small number of UK employees and I don’t think they understand the crazy UK tax system where someone can be worse off for earning more!

If you don’t think Mumsnet should be open to people who are high earners maybe just avoid reading their posts. OP asked for support not a kicking because she earns more than you.

Jeeezzz! Do we want our population to survive or not?

That's very odd. Paying one off extra salary into your normal work pension is pretty standard?

Not having to set up a whole new pension with associated admin for it.

You could pay it into your pension and do a self assessment reclaiming the tax and adjusting your net income below £100k.

Well yes but common sense with how expensive it is to wait for some funding before your next one comes along.

@NameChangeBonus Put your bonus all towards your pension, not read full thread to know if anyone else suggested that already. That should mean not going over the 60% threshold.