100% effective tax on earnings £100-148k

[Childcare47]

I have posted in the past about the impact of loss of 15 'free hours' plus loss of 'tax free childcare', which combined with the 60% tax rate creates a severe cliff edge in earnings.

The situation is in fact even worse - as it has been announced parents earning >£100,000 will not be eligible for any free hours from 9 months.

For two children therefore:

• Loss of £4,000 annual tax free childcare
• Loss of 30 free hours for the under 3 = £800pcm
• Loss of 15 free hours for the over 3 = £400pm

This is £18,400 a year lost if you earn a penny over £100k.

To therefore break even on that £18,400 loss, you need to earn... £148,000? To have exactly the same income as at £99,000?

Why does the government not address this absurd 'quirk' in the system, surely not one can think its right to be taxed at a rate of 100% on a third of your income, what's the point in earning it?

That's for those individuals to decide.

I want my taxes to go to the most vulnerable not the top earners given the state we are in.

That's for those individuals to decide.

I want my taxes to go to the most vulnerable not the top earners given the state we are in.

This thread is quite a sad read. Such a dog eat dog, or rather bitch eat bitch atmosphere.

I am actually pretty sure if a problem like that was a "male" (for the lack of a better word) problem, and was discussed on one of forums close to "manosphere", with all the toxicity that exists there on many other topics, the unfairness of the situation would have been understood and acknowledged. And the general consensus would be "fair play to you bro, yes that sucks and completely illogical, needs to be fixed".

But here, just wow. A woman DARES to have a high paying career and young children. Who does she think she is! Does she think she's better than a nursery worker! Is she above wiping bums?! Did she think of giving all her extra money to the poor! Why did not she plan her children better! My eyes bleed.

So many people on this thread not getting the point.

But if you let the top earners wear more they will pay more tax that will go to the poorest in society, instead of it being squirrelled away in their pensions.

@SiousieSoo

"It is about 'beliefs' insofar as it amounts to someone selectively demonstrating their perceived slight at this one element of 'inequality' in contrast to the wide ranging and devastating impact that some policies have on very vulnerable members of society though. "

Where have I commented on this issues importance vs other policies impacting other groups?

No need for the attitude. It's an issue many posters are impacted by, as you can see by those agreeing with me. It's a forum, people discuss things on it. Yes it is a current issue for me deciding if I can cope with the number of hours and sacrifices required to make a larger salary, if I will not receive any financial benefit from it.

If it does not interest you, I advise you just avoid the topic and focus on one of the many, many threads on different subjects.

Oh spare me. One word sentences like “Sad.” make you sound like Donald Trump.

You want nuance? Here: how about everyone earning over £80K starts voluntarily paying progressively more tax (or giving to charity), so that once they hit the £100K it’s not a cliff edge. Fairer? Definitely. Fixes the OP’s problem? 100%. Will she be happy? Absolutely fucking not.

OP but this reduction in income is only for a short period of time, when you need less or no childcare you will have earned more (put more in your pension). You will be way better off, just like those women who are effectively not earning good anything while paying for early years childcare.

There always has to be a cut off somewhere. The government can't afford to.pay for everyone and doing it a a straight cutoff makes it cheaper to administer.

But it doesn't make financial sense for the government, they should be incentivising me to work more and pay more tax.

This is nonsensical.

If higher earners (over £100K) want the government to subsidise their childcare so they are not paying what is effectively a 100% tax, then the government will be getting less money, not more because their increased taxes will be outweighed by the increased subsidies.

If I had this ‘problem’ I’d simply drop my hours.

High income + more free time = perfect life.

I am just finding your outrage about this to be quite tone deaf to be honest.

Totally agree OP. The predictable responses are out in force which could be cut and pasted from any thread which discusses an issue for higher earners. Because they're not allowed to complain. MN is such a race to the bottom it's unbelievable.

It’s annoying that it’s not a combined income. My husband earns 120k and I earn 30k as an nhs nurse (part time-0.6) so 150k total. We could both earn 95k and be in such a better position. I don’t have the capacity at the moment to earn much more so he has to keep trying to increase his income and we get penalised at every turn it seems.

We have one child in nursery and another coming, live in a high price area of the country but can’t move due to caring for elderly parents as well. We are happy to pay high tax as we both have the health and education to work full time in good jobs but it does feel like there isn’t much reward for pushing further.

So you’re bitching that you’ll have to pay full fees for 3 years?

you’re angry that you’ll be earning 150k a year and 50k will go to nursery fees etc

you’re angry that once your kids reach school age you’ll be significantly better off. That suddenly you’ll get a decent chunk of disposable income Whereas a worker on £22k who gets 30 free hours and won’t get a sudden increase in disposable income when their kid reaches school age.

oh love.

You have absolutely no idea of my earnings or the earnings of any other person on this thread. I simply said that I found the post to be tone deaf. Check yourself before you post.

How much tax do you think someone earning £100k ought to pay? What’s a fair amount?

Its amazing how many of the high earners moaning about paying for childcare will suddenly find the money for private education, private health care etc when there are free options available then.

You have absolutely no idea of my earnings or the earnings of any other person on this thread. I simply said that I found the post to be tone deaf. Check yourself before you post

I don't earn anywhere close to £100k either. But I'm supportive of those who do and take an interest in things like this because of the job I do. The title of the post is quite clear so if you're triggered by higher earners, scroll on.

People seem to be forgetting that the person earning £148k is paying around £64k in tax.

In the OPs example - the country earns around £19k additional tax income from the woman who gets the £48k pay rise from £100k to £148k. The high earner paying 45% tax isn’t just bludging off the government to get free childcare, their tax is literally over-paying for it.

So disincentivising someone to take the pay rise that would have resulted in a tax income that equalled the benefit makes the government and the woman who declined the promotion worse off.

Woman earns £99k and government gives child benefits of £18k - government down -£18k.

vs

Woman earns £148k, giving government extra £19k in tax and government gives child benefits to her - government is up +£1000 !

So disincentivising someone to take the pay rise that would have resulted in a tax income that equalled the benefit makes the government and the woman who declined the promotion worse off.
Let's be realistic. The promotion will just be given to a man if a woman declines it. Such a win for equality.

It's not really the same thing. Support for childcare costs are means tested (one of the points of the post) but education and health aren't. A lot of people go private because they're so used to forking out £1000s for childcare that it's a natural progression. And if I go private for school then I expect I'm paying for a far better 'service'. There is no better service option for me paying more for nursery fees. It's the same nursery.

Who is 'triggered' I don't understand? Is it for you to decide if anyone is triggered? What does triggered mean in this context? I think people are capable of making up their own mind as to what they decide to read.

There are some very predictable responses on this thread.

I found myself in this position. The point that most appear to be missing is that the solution is nearly always to work less for a period of time and thereby pay less tax. That helps nobody.

I timed my return to work and my child starting at nursery such that I only earnt £99k in the first tax year after maternity leave as I didn't work a full year. That meant the Treasury missed out on significant additional tax from me that I would normally have paid.

It is not about whether higher earners need supporting with childcare costs it is whether the system disincentivises them to work more. If I had my child when I was younger and earning far less I would never have been in a position to turn down any work. As it was I took longer off because I could afford to but that results in less tax being paid to help support others.

My average tax bill is 80k + NI. I think I more than pay my fair share.

Many will use the tools at their disposal to pay as little as possible.

Exactly my thoughts. It’s a race to the bottom mentality that’s so endemic in British culture now. Hatred of anyone doing well and how dare anyone be successful and get some help from the state. Yet many countries who posters on MN admire like Norway and Sweden have progressive family policies that benefit all workers because they recognise that universal childcare helps keep people in work and earning which also helps the economy and tax receipts.

Theres a stat like nearly 50% of British adults pay no income tax. Which means the same group of workers are expected to largely subsidise everyone else’s childcare, pensions, etc but get zero help to themselves to keep them in the jobs that actually provide the taxes! And we wonder why so many women step out of the workplace or take lower paid jobs. It’s lack of affordable childcare every time.