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'm amazed that those are your nursery costs. Mine weren't anywhere near that high for full time even when neither had the free hours. I'm just outside London too.

Give the balance to an individual? That seems really... patronising. How would that even work? "Hello Cleaner. I notice you work really hard. Here, have the balance of my £5,000 Christmas bonus that I can't actually accept myself because it would tip me over into the next tax bracket. 😐"

People are paid what their employer thinks the job is worth, and if it's too little it's not the responsibility of marginally better off individuals to fix.

Can you out against student debt?

(I'm old and i didn't go to university)

😂😂😂😂 now this one must be a joke...we're broke us, obviously not including our large number of children all in private school or our large house...😂

You could ask for a lower amount and ask them to donate the rest to your choice of charity or ask them to defer until the next tax year ?

Not exceptionally well off but paying for 4 kids to go to private school 😆😆😆

Newsflash: you're still well off if you decide to spend your money on totally optionally, really expensive things

I’m sorry, but compared to the vast majority of workers, you ARE rich. The size of your mortgage is your choice, as is the cost of having 2 children in nursery. Maybe Dh could be a SAHD to cut those costs?
The average income is £38k per annum. Many people on minimum wage earn around £20k.
People aren’t necessarily jealous of higher earners, but are maybe annoyed that they have to worry about how to pay their gas bill or new shoes for the kids.

I’m sorry you have had so many spiteful replies, OP. My employer staggered the payment of the bonus for those who wanted that option so you could explore whether that would help in your circumstances and if they’d allow that. Our employer also had to be asked as they didn’t know how it would impact individuals, it also affected the lowest paid who were on universal credit.

I’m probably wildly out of touch but if you are getting 30 free hours how are your nursery costs 3.8k a month?

True enough @uhOhOP and @burnoutbabe
I just like the idea. A bit like when you can afford to leave a ridiculous tip for a waiter, or throw a roll of notes into a homeless persons lap. Just those feel good things. You're right though, it wouldn't work in reality!

@NameChangeBonus

Ask if you can have the bonus spread over the year or payment delayed until April so you can place it in your pension as per your original idea.

It would probably be worth spending a small if this money consulting an account.

Give it to charity?

Why envy? Hasn't won the lottery it's been earned.

Look into additional pension contribution. I think DH does it and when he does his tax return each year we do get money back, just 2 months after Christmas.

The issue is that it affects too much, I don't mind the higher tax rate on money earned but I do hate the effect on certain benefits like childcare. Just because I got money this year it doesn't mean I always get it.

Because it’s based on individual income. Two 99k earners wouldn’t have this problem.

Calm down love it was just a joke. Is this your first day on the internet?

No one is saying OP is the enemy. But when someone who earns close to six figures is complaining that things are tight and others are surviving on a quarter of that or less don't do you honestly not understand why that rubs people thr wrong way?

Oh the jealousy and down right nastiness to anyone that earns well is getting out of hand on here.

Can you exchange the money for other benefits? Dental, more holiday, shares? No idea of the tax implications.

Sounds like you cannot afford the lifestyle you have created for yourselves. The choices you have made means you are not well off, surely it is not that difficult to work out.

Why do you have 4 children in private school? That’s ridiculous. We had 3 children and they went to decent state schools. We had an income of about £100,000 about 10 years ago . They are all doing really well as adults ,went to RH unis ,earning good money and happy functioning adults!

But @Girahim, if you extrapolate your thought process there, it means that no one could ever complain (and actually op was more just questioning) about anything ever, unless they were the very lowest rung.

Poor me I've only got one leg.
Stop complaining, I've got none.

Poor me I've only got 2p to spend on food this week.
Stop complaining, I've got 1p.

Etc etc

So many pissy responses to what is a perfectly reasonable question. It’s not a crime to earn a lot.

Ask your company to put aside your bonus and give it you as a lump sum in 3 years when you don’t need childcare.

Why and when should someone ask for help on here, you choose any point in history and there will always be a mix of points, so are people that earn over x amout not allowed to ask on here ?

I think you should make additional pension contributions, it doesn’t have to go into your workplace pension, open a SIPP as somebody said. That way you keep the full amount. Or give it to charity.