Salary bands with tax vs benefits

[Totupthenumberspls]

Asking here because I guess someone has done the numbers….
When earning around the 100k mark, at what point does it become beneficial to drop hours to gain childcare allowances etc vs what salary do you need to achieve to offset these benefits?

If you can afford to put anything over the 100k in pension you will still be entitled to free childcare hours etc

So at 159k if you put 60 into pension you are still entitled?

Make sure you don't go over any pension thresholds (annual/lifetime allowance)

Annual is £60k.
There isn't a lifetime allowance anymore (currently... but that'll probably change if Labour get in, then high earners will have a reason to reduce working hours, which will shrink the overall tax pot).

If you earn £159k and put £60k into pension, then your gross / taxable income for all HMRC purposes is £99k.

For me personally only after I have put £60k per year into my pension

159k isn't 'around the 100k mark'.

I think if earning over 100k you don’t need child benefit

You can use other forms of salary sacrifice to lower your earnings too.

Earning between 100k-120k is where you are hit

Correct.

in fact if you previously didn’t use the full allowance last year you can pay in more

ie if you “only” paid in £10k last year you have a total allowance of £90k this year
(£60k allowance this year and £30krollover from last year - the allowance was £40k then)

https://taxscouts.com/high-earner-tax-returns/what-are-the-tax-implications-of-earning-over-100k/

Slight over £100k I don't blame you but £159k isn't slightly over. It is a bit cheeky.

It will also depend if you use a lot of childcare to make the tax free childcare beneficial. My husband earns around £140k and does put a lot into pension but not enough to get under £100k. But we use limited amounts of childcare so it isn't important.

You would have to do the sums for your own personal situation, whether you can afford to put so much into pension etc.

If you are earning £100k then likely with pension contributions you'd be fine anyway. I think I read something that worst salary in terms of benefits is the £115-130k range.

Tax free childcare is worth £500 every 3 months so £2k per year
Free 15 hours for over 2 year olds will be worth x amount depending on your nursery fees
There will be a level at which you choose to accept losing this money - probably you are beyond this at £160k. Or you mitigate by pension conts and salx etc

Child benefit stops at £60k.

This; my financial advisor told me last week that up 100- £125k is the band to take the biggest hit as you’re effectively paying 60% tax due to the loss of your personal allowance

What I didn’t ask is how / can you claim for childcare allowance if you earn over 100k; I understand you can offset with pension contributions to bring you under 100k to qualify, but how / what do you need to prove this to claim?

One other thing on pension contributions - it’s a 60k a year max on contributions, but you can also use the allowance from previous 3 years up to 40ka year, if you haven’t maxed these out

I think my 15 ‘free hours’ are worth £3k (less than I actually pay per hour…)

Plus tax free childcare = a benefit of £5k per child.

After tax, on £125k, you get £10k take home.

So to break even with two kids you need to earn £125k I reckon. To make it ‘worthwhile’ earning that extra… a lot higher. Hence people salary sacrificing into pension.

My 15 hour reduction should be more like £5k (£7k total), but the local nurseries don’t fund to this amount.

Yeah I think gift aid charity contributions can be used for going below tax/benefit thresholds too?

Any employee benefit that has tax savings will lower it. Pension, pmi, buying holiday etc.

PMI is taxable.

Tax free childcare is only £2k per child unless child is disabled

Also getting a tax efficient company car on salx, ie a pure electric car. There will be a taxable benefit increasing pay but the sacrificed amount will likely be significantly higher

@MidnightPatrol sorry ignore me I see you were adding them together already 🤦🏼‍♀️

Is this Labour policy or just a scare story?