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?

And she pays 14 times as much tax as you!

How much are you paying for childcare?

You could see if they could defer part or all of it to next tax year.

I think it’s fairly obvious that my post is about your first comment, and your second comment indicates that you hadn’t thought things through properly before berating the OP to look at her outgoings. I have no idea why you’re introducing the other comments,
they have absolutely no relation to what I was saying so I’m not sure why you’re sparring with me on that.

Just ignore him @Dibblydoodahdah , don't get sucked in.

Thats out of order, talk about bad manners.

So if you’re well past this level of earnings you won’t be affected by the 60% marginal tax, or actually it costing you more money to receive a bonus than the bonus but itself. Of course there wouldn’t be anything for you to ‘complain’ about. And I’m not complaining, I’m just asking for advice.

Do not feed the troll. Have reported.

The £100k tax threshold is really punitive. It’s a really stupid hard cut-off where people lose a lot of money for earning a bit more.

OP the only idea I had was where you could offset it against some unpaid leave and reduce your income that way by getting some alternative benefit.

The UK has the most expensive childcare costs in Europe - it’s an eye wateringly expensive. Even people on great money find it a stretch for a good couple of years when the kids are little. This is terrible for ALL working parents, whether we’re on min wage or £200k.

As others have said tell them you only want 3k. Could they possibly donate the rest to a charity of your choice?

Ask if you have “Bonus exchange” where you can put your bonus into your pension as a lump sum.

Totally agree the system is at fault here.

The OP should already have had the tax free childcare and all the other benefits removed, as she's part of a household earning over £100k.

Unless people have actually been in a situation where circumstantial outgoings end up more than high earnings they will never understand this OPs situation. It's not a given high earners live on a bed of roses.

It's called living in London. This comment section is pathetic sometimes.

It's not the asking for advice, it's the complaining that things are tight when she's in the top ten percent of earners.

Ask if they can do a bonus sacrifice and pay it into your pension , that's what my work does

£100k doesn't go anywhere, are you serious?

If you're earning £200k+ between you and have four kids at private school you're well off, no matter where you live.

Plenty of people live in London who are not earning anywhere near that. .

You're right, some comments are pathetic.

Absolutely @Changehappens

On these threads you always get people who just can't understand the much higher costs that accompany a much higher salary. Tend to be higher childcare, higher commuting, often insurance, often CPDs, often student loans, plus obviously higher tax. So that even AFTER the op has detailed her breakdown, you still get people saying she's managing her money wrong. Rather than being snippy, maybe think about how bonkers it is that someone earning £100k isn't rolling in it.

@girahim Indeed but with eye-watering outgoings, including childcare.