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?

Gosh, ‘same income regardless of role’…you speak as if that s a new idea / alternative that no one has thought of before……or I’m misunderstanding your post.

There's some backstory to this on this thread. Some posters have commented on the thread that the OP, suggesting that they should be grateful and accept their current wages. Others question why the OP is seeking advice, while some argue that the wealthy should be taxed more. Additionally, there are those who believe that if a person studies, achieves promotions, etc., they earn the wage they receive, a perspective I understand and agree with.

My point was to address those who weren't impressed with the OP seeking help. I proposed that if individuals were dissatisfied with the disparity in wages due to roles, promotions, private companies, etc., why not advocate for everyone to be paid the same amount regardless of their role?

This suggestion aims to test whether the critics would still argue that the OP earns too much.

I think you are right there, there is an underlying Marxist/communist current in the thread that’s fuelled by envy but cloaked in ‘fairness’.

Same income regardless of role 😂

Yep, as if that’s not been tried before.

But then, why do some posters not understand (or do they) that a person receives different wages depending on the role they perform, etc.? Instead, they seem to prefer the mantra of just taxing the rich?

It’s been proven that this cliff edge harms tax take. Along with the removal of child benefit at the lower level. People avoid these thresholds for a reason. The 100k anomaly is well publicised in those circles. You can literally be 10s of thousands worse off for earning over 100k by a £1. You lose personal tax allowance, child care hours on top of 40% tax and NI. This gives a marginal rate of close to 70% and over 100% if you have children. Why would you work more to be thousands worse off?

What people forget is that it’s these people paying the most tax. Making them less productive than they could be harms everyone as it lowers tax take. With over half of adults now taking out - we can’t afford that. Other tax systems which are lauded on here - don’t have such a top heavy system of takers. Adults are expected to be productive and everyone is expected to pay a decent amount of tax. In this country, we are classed as low tax because so few people pay tax and those that do - pay low rates. Higher earners already pay their fair share in comparison to other countries - more than in most cases. It’s everyone else who doesn’t.

People become so green with envy about a 6 figure salary. Not stopping to think that it’s irrational to get angry with the very people funding society. All they did was get a good career. Nothing wrong in that - we should celebrate aspiration. The fact we don’t is why the country is fucked. No one wants to do well, happy to take the scraps others are paying for. No anger at why wages are so low in general. Even higher salaries here are really uncompetitive alongside the tax burden. No anger at the person sat on millions paying less tax than those who work for a living. Yet the workers should constantly pay more to fund society. Why? Is over 100% marginal not enough for you?

It takes a special kind of bitterness, envy and stupidity to click on a thread like this. Then offer no advice and just tear a woman down for being successful in her career. What a hole MN is now.

Pay for professional advice. You can afford it.

A bunch of people guessing is not to be relied upon.

It’s really not that deep. That’s why she asked here because people live this situation every day. They can’t help it the thread was taken over by communists.

Pop the extra in a pension and do a self assessment and the end of the tax year.

100% this. Agree with every word. Basic rate tax is 20% here. 30% in many other European countries. Then we wonder why their public services are better than ours.

Communists. 😂

I’m a finance professional and the vast majority of “advice” isn’t right. And no, I am not giving free advice.

The vast majority from those in that position is.

I am a finance professional and have given free advice. And countered the wrong bits.

She can have as many kids as she wants but she can't complain about the cost of childcare if she chooses to have them close together. 🤦 Why do you think many get a new sibling after three or when starting school?

Margaret Thatcher reduced the higher tax rates and the overall tax take increased.

Just sayin 🤷‍♂️

Donns hard hat.. lol..

@Christmasaaarrrggghhh Basic rate tax is 20% here. 30% in many other European countries. Then we wonder why their public services are better than ours.

Up to £12,570, you pay income tax at 0% and National Insurance at 0%

From £12,571 to £50,270 tax is at 20% AS WELL AS National Insurance at 12%

That's 32% and that NI isn't put into a pot in your name. Some (£20 billion+) is diverted to NHS England, the remainder goes into the general taxation pot and is spent on Suella's payoff, subsidising Parliamentary food and drink or running schools or the Fire Brigade.

All of this is explained in gov.uk, webpages but generally in opaque ways that require a degree of prior knowledge to fully appreciate. Then, some accounting sleights of hand reduce transparency further, so all of the funds destined for NHS England are deemed to be spent in full - before any other funding - to ensure that underspends by the Department for Health and Social Care don't give the impression that NI should be reduced.

It's dry stuff, that few live for, but the history of why the government accounts for things as it does, what we are being taxed for and how the money is used would make for a fascinating TV programme or a series of podcasts - and that would really inform the next general election.

That's basic economics. I earn 200k after pension contributions and pay around 80k in deductions every year.

If the top rate taxes were lower I'd probably stay in work for longer. As it is I'll retire earlier. Even if it is 6 years earlier than I intended this equates to half a million in lost receipts for the Treasury.

People struggle to accept that higher earners need incentives however once you reach the point where you don't really need to work any more you soon start assessing whether it is worth it or not.

With the top 1% paying 30% of all income tax the government needs to be careful not to upset this group of people.

I know. I work a lot less than I could because I don’t need to. I’m not working any harder or longer to pay more tax.

Damn @Charlie2121 what do you do? I'm hitting 135k with bonuses and thought that was decent lol. Very impressive 👍 keep the tax coming it's needed 🤣

I haven't read all threads of this, but have you asked if it's possible to divert 100% of the bonus to your pension as a one-off payment? My employer does this. It actually saves them money somehow (I think on National Insurance payments) and they give us some of the saving. It means that if you divert all the bonus to your pension, you actually get slightly more than the amount of the bonus stuck into your pension pot. It's a no brainer for me, but annoyingly means I won't enjoy any bonuses until I'm retired. Not massively complaining, I'm fortunate to get a bonus and it's entirely my choice to stick it in the pension pot (I don't do it to avoid the £100k threshold).

Also, I haven't done it personally but I understand you could get the money and then add it to your pension pot as a one-off payment yourself and somehow claim the income tax back. I think that would mean that you keep your income below £100k. Worth considering.

Legal profession in quite a niche, heavily regulated industry where experienced peer competition is sparse hence the high salary.

135k is very decent. I earned well below that for much of my career.

Its a small % of the income that is taxed so highly, a good employer should realise this and adjust or offer different bonuses.

Its not jealousy, its that people don't quite get why an Oncology nurse for example, working long hours, mega stressed, saving/improving lives, earns so little compared to say a senior manager in the city.

Please don't say "Supply n Demand" we ve huge shortages in Healthcare.

Perhaps also, in a COL crisis, people who are fortunate enough to earn 6 figure salaries should keep their wealth to themselves?

why an Oncology nurse for example, working long hours, mega stressed, saving/improving lives, earns so little compared to say a senior manager in the city.

what makes you think a senior manager is jot mega stresses and their work has an impact on improving other people’s lives ? My previous role was developing software for nhs , whilst I wasn’t directly saving the live I was supporting those that were saving lives , making their work easier and as such saving lives. Not only those earning minimum wage have got a difficult role

You are able to read - why click on a thread where you’re going to be offended and have no wisdom to answer the question.

Last time I checked - this site was called Mumsnet. Not minimum wage net or UC claimants net. Although you’d not know it. You have zero right to police what advice people come here for.

Crass and pathetic comment