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?

I’ll have some of it if it’s going spare 😀 I also have 2 kids and a mortgage and have never ever had a Christmas bonus!

Either that or find a worthy cause and ask for the money to be donated to it.

Finances will be much better once kids are done with nursery years…but for now we could really do with the 30 hours and TFC.

Surely the obvious thing is to put it into a sipp and fill out a tax return.

If you're paying more in childcare than your husband earns, could he be a SAHD? You could look at the figures and see if it would benefit you all. And then decide if he and the children would benefit as it isn't easy (I say this as a SAHM).

And yes, I agree with PP suggestions about the ways to help with the bonus issue.

@UsingChangeofName and @egowise you’ve showed yourselves up a bit.

Do you not think the problem lies in childcare costs of £3.8k per month for two children? Another area that’s underfunded and yet here you are being spiteful and jealous about a woman having a decent paying job. How embarrassing.

🤣🤣🤣 #richproblems

Can we please not use logic here, thanks.

Don't we spend ages on this site encouraging women to Stay in their careers even when childcare costs are large to keep on the ladder/get those promotions and those pension payments as it's only a short term struggle until school starts?

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.

I understand that there are a very small number of families on super high incomes that skew the figures, but I think it is important to be realistic about how few people earn £100k.

Yes we are paying more in childcare than DH earns…but we see it as a short term thing just for a few years. DH loves his job and a SAHP isn’t something either of us were keen to do…we can obviously manage okay….but for some pp to think we are rolling in it is simply jot true.

There’s some good ideas around pension, unpaid extra leave, not taking the full bonus and charitable donations.

Also does your employer do any salary sacrifice schemes, such as bike, computer, car? They could help reduce your salary?

Either ask for a lower amount, ask for it to be deferred until April, or ask if you can take £3k now and £2k in April.

Or ask if you can make a one off additional pension contribution.

if people are envious maybe they prefer a society where everyone is paid the same amount no matter the role they do ?

One of the reasons pay in this country is so poor is bitter crabs in a bucket complaining about anyone earning more than them instead of their own rubbish wages! 100k isn't that much these days if you have kids.

Opening a SIPP and doing a self assessment tax return is probably the simplest option

That's bonkers from the government!!

That aside, I love the idea above about taking the max you can without affecting anything (£3999?) and giving the remainder to the cleaner/someone else you think works their arse off for peanuts in the company.

@burnoutbabe I don't, no. I'm a SAHM as it's benefits us all round inc financially.

Nothing wrong with asking financial advice about how to deal with it.
It was the comment about things being "tight" that shows a complete lack of awareness of how the overwhelming majority of people in the country live.

You refuse it. Or get it paid to charity. My company gave a teeny tiny bonus and some staff had to refuse it or they would become ineligible for carers’ allowance and would have to reapply for it the next month. Because carers allowance of £76 a week can’t be claimed if you earn more than £139 a week. Now that really truly sucks! (We snuck them a Christmas present instead)

This isn’t unusual. Ask them to revoke, give it in annual leave or transfer to next year and increase pension contributions or accept it. The window of just over £100k is a pain for this. Get some tax advice.

Agree with @Cassepoia, similar experience here and pension contributions could be deducted from the £100k keeping you under the threshold for childcare purposes. Have a good google and you’ll find it somewhere. I think even the childcare eligibility sayings something like ‘gross minus x,y,z’ but can’t be sure.

In this day and age, especially in the South East, £100k doesn't go anywhere. Especially if you have 4 kids in private school like us. Even with both of us earning over £100k, we aren't expectionally well off. Our mortgage is £3k a month for a start!

As you are married, as your joint income is over 100K, how are you not already being penalised?

I'm not jealous in the slightest.
We are actually quite comfortable financially now, but I don't go around overstretching myself and then trying to gain sympathy for budget being "tight" when clearly a) it isn't, and b) the outgoings are part of decisions the OP and her dh have made together.
I have nothing to be embarrassed about. What an odd comment.
You might not agree with my opinion - that's fine, this is a discussion forum - but I've not done anything I need to be embarrassed about.

You can't give it as that would mean you received it.

Telling your boss to give company money to someone they didn't want to give money to is just weird. No business works like that! M
Though I did actually ask if we can give bonus to my finance junior as they would see payments happen in the bank and kbow they were missed off (whereas everyone else at that level would be unaware of any bonus situation) I was prepared to fund sone of that from my one but boss saw the sense in my argument so he got a flat rate amount (and still benefits similarly many years later!)