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

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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?

I’m absolutely gobsmacked that someone on £96k is claiming the 30 hours funded childcare to be honest. Plus your husband also is bringing in an income

I do recall having to refuse a bonus payment because it would leave me worse off on my measly single parent universal credit payment - at a time where I was already accessing food banks sometimes to feed my children. Scraped by though on my £21k p/a salary - what I wouldn’t have given to be on £96k

So what are you after OP? Ways to hide your bonus from the taxman????

We have a very unfair tax system - and I don't mean the rich pay too much tax - maybe the Gov could find some time to address these anomalies if they weren't squabbling like children all the time.

Pay more into your pension to take you below the threshold.

Understand perfectly. Highest earners want to not only keep their earnings, but still have other taxpayers subsidise their lifestyle and choices. I’m one of the mugs that stopped claiming CB when our earnings meant we could live without it, because we believe in personal responsibility. No inheritance, no family help, just hard work, sacrifices and choices - loved my career but cheaper to stay at home rather than pay for nursery, then back to work as soon as able (part time, DS with chromosomal abnormality). Choices and consequences.

Fuck off, do. What’s the point of bitter posts like this?

Where do you think your universal credit came from!? The magic tree? Its people like
op paying high taxes that enables this country to be able to help people in less fortunate position

i completely understand where the OP is coming from. If I am sacrificing and working hard to earn that salary and get a bonus, why should I have to LOSE money out at the end of it?

everyone chipping in with their lifestyle choices and coming down harshly on OP because god forbid she had a different life choice than to stay home and look after her kids.

OP, have you actually spoken to a tax specialist about this? They would be the ones who are best placed to advise you on if there is anything that you can do in order to save the tax. Maybe a separate pension contribution or something like that?

If you earn over £100K you will have to do a tax return anyway, so find yourself a decent accountant who can help you to make the best of this bonus tax wise.

Her taxes paid for you to have that safety net.

"I do recall having to refuse a bonus payment because it would leave me worse off on my measly single parent universal credit payment"

You did the exact same thing.

Can’t you start a brand new private pension elsewhere and just put the entire bonus into that?

The question is why are posters so triggered. I’m technically a low earner due to AI illness so I can’t work FT. Yet I have no issue with people earning more money. I can only infer that too many MNers are materialistic, jealous and bitter people.

Yeah it’s interesting. Regardless of what you earn our tax system has many issues.

You could start a personal pension and put it in there.

So you don’t understand it.

The OP isn’t objecting to paying tax. She is however hitting a cliff edge that means 100% of the tax free childcare benefit is withdrawn if she accepts all of her bonus. Accepting the bonus costs her significantly more than she will receive and she is asking for advice on legal avenues to mitigate the situation.

Now it’s very nice you stopped claiming child benefit when you thought you didn’t need it. You didn’t need to do that. And you can’t complain about the consequences of your rather odd decision.

How about quickly taking some unpaid/parental leave to make sure you are below the threshold?

Sorry, my mistake, OP isn’t objecting to paying tax, she’s objecting to paying more tax and not being able to claim benefits.

I do recall having to refuse a bonus payment because it would leave me worse off on my measly single parent universal credit payment - at a time where I was already accessing food banks sometimes to feed my children. Scraped by though on my £21k p/a salary - what I wouldn’t have given to be on £96k

Well ignoring the fact you did what the OP is trying to do the other advice to the op would be why didnt you have savings? how many dc did you have? did you use common sense to space out your dc? etc etc.

@Figgygal It's a good point - at least with a pay rise you can up your regular pension contributions as a surefire way to avoid the issue.

OP isn’t objecting to paying tax, she’s objecting to paying more tax and not being able to claim benefits.

Who on earth wouldn’t object to the above? Time and time again we see posters saying if they increase hours they will lose their benefits, or because they have savings they are over the threshold for free care. Why shouldn’t higher rate tax payers get benefits as others do?

This country promotes mediocrity. To everyone saying OP and other high earners should pay taxes are saying that because they know they can never work as hard as OP. This country sucks for anyone earning a decent income. Comparing it to my siblings living in USA, they earn far more than £100k and pay way less taxes.

Now it’s very nice you stopped claiming child benefit when you thought you didn’t need it. You didn’t need to do that. And you can’t complain about the consequences of your rather odd decision.

Yeah that’s defo odd.

If you didn’t claim child benefit when you could have you are an idiot. You don’t get to lecture others on their finances.

Good for you OP doing so well in your career and raising 2 children at the same time. I saw this thread last night and predicted it would go this way. A £100k salary doesn't go anywhere near as far as it used to and that's uncomfortable truth.

Really bitter nasty comments.

Instead of raging against OP those people should be raging against the fucking government and I mean successive governments including Labour, who none of them, want to increase tax on the super rich who genuinely don’t need another house in Malibu or Provence etc.

OP is just doing her best. It’s the mega rich who dodge tax left right and centre and hold most of the wealth of this country that people should target their ire at.

At least OP has a job and is not taking benefits.

Stop shooting your own. She’s playing within the rules she didn’t make up, by the way. It’s the repeated governments failures to tax the 0.5% correctly that means we’ve ended up in this bitter mess.

Ask to receive the max that wouldn't tip you over the threshold and the employer donates the rest to charity.

There is so much bitterness on this thread, in the US they really admire people who are successful and yes earn lots of money, rather than resent them and complain how unfair capitalism is. The basic premise of capitalism is that if you work hard and take risks and are intelligent you will make more money than those that don't and have a better life. The opposite, communism, where everyone ends up with the same regardless of what they do, does not work...

@babbygabby so odd that I think it may not be the whole truth.