There’s NO point earning over £50k?!

[ThisReallyDoesntAddUp]

Because of the £50k child benefit limit and 40% tax rate!

So I earn £78,000 pro rata overall now with my job following a mid year pay rise. This includes bonus and car allowance. I work 4 days a week (80% equivalent) which brings the overall pay this year down to just shy of £50k with a £9.6k bonus.

Out of the £9.6K bonus due in March, I’ve worked out 40% will go to the taxman, over £2K will need paying back for child benefit as I’m now over the £50k threshold, and a further £800ish will go towards my student loan. Deductions of just under £6k!!! This means I’ll only take home 30% of my bonus?!

I’m now on mat leave for baby number 3. AIBU to make sure when I go back I remain under the £50k mark by reducing hours even further?! I’d then have less to pay in childcare mitigating the difference in the pay I’d receive working an extra day each week.

Its an absolute joke, I was hoping to go back to work after my last baby and push on hard with my career but what is the actual point!! I may as well work less hours, keep the child benefit and pay less in childcare!

The marginal tax rate in the Uk can easily be more than the top rate of 45%. I was paying a marginal rate of 69% between 50 and 60k due to the loss of child benefit.

Depending on the circumstances over 100k there are similar if not worse marginal rates.

The poster I responded to reckoned she was paying 60% tax, plus NI and losing child benefit. Nobody pays 60% tax alone. It’s also completely misleading to rebrand loss of a benefit as a tax.

I disagree. The marginal rate is a disincentive to work, increases pension contributions around that mark so actually reducing tax collection. It's collected through paye but it's not a tax charge?

It disincentivises the earner in the same way we hear all the time on here about people not upping their part time hours due to the loss of benefits.

Over 50k I took home 31p for every pound earned. Collected through paye by HMRC.

OP's problem is the cost of childcare.

So basically you're happy to work less and take the child benefits, which I would say aligns with a lot of peoples views.

Then they moan when tax and national insurance are increased by govt.

I agree the system is screwed and it shouldn't be that way but that doesn't mean you have to do it yourself.

You pay 60% tax on income between £100-125k, due to the removal of the personal allowance.

Yes pretty much! I understand it’s not for the ‘greater good’ but if theres no financial benefit for my family or I, why on earth would I choose to put my children in breakfast/after school club & nursery 5 days per week? When I could work 3 days for similar overall finances, or 3 days over 4 and be able to pick my children up at 3:15 rather than half 5/6?

And whilst not a tax, when you hit this bracket (£100k) you also lose:

• "tax free childcare" scheme, so not £1 of the childcare payments you pay are tax-free
• Important to note also that this scheme replaced the old Childcare Voucher scheme (same principle - a small portion of money you pay for childcare is tax-free) which doesn't/didn't have the £100K limit applied, so newer parents are disadvantaged in comparison to parents who had kids a bit earlier (pre-2018/9 I think) when childcare voucher scheme was still around.
• No entitlement to 30hours free childcare (or any of the new 15 hours free for under 2s/9month olds etc.).

Removal of these schemes actually results in taking home LESS than if you were on a lower salary.

All these are removed at a cliff edge - no tapering down like you see for child benefit. If you earn £100K you are no longer entitled to any of it at all..... and you also lose your tax personal allowance at the same time. And yet we wonder why so many GPs and other professionals are opting to work part-time and refuse to take on more hours!

I'm not sure how much longer the government can have their heads in the sand on this one, as more and more people are being impacted by it.

How have we managed to create a tax system whereby the top 5% pay 100% tax on 25% of their earnings, if they have a couple of preschoolers.

Of all the groups to excessively penalise, seems a strange one.

It’s unintended consequences. But let’s face it, it’s something that affects a small number of people for a limited period, just like the WASPI women. It’s intensely irritating during the period you’re affected and you forget all about it as soon as you’re not.

It's £50K + tax free childcare (up to £2K per year per child) + pension payments (up to £60k per year) + salary sacrifice benefits + charitable contributions + investments in Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT). So you could be on a really high salary but had everything arranged so you didn't pay high rate tax or lose your child benefit.

Not really, this is a permanent feature of the tax system.

And - it disincentivises work among those paying the most tax, which is counterproductive.

I know it’s a permanent feature. Nonetheless it affects a small number of people who have preschool age children. The kids start school and the problem goes away. I saw somewhere that it affects about 300,000 people at any one time, that’s a miniscule percentage of the workforce.

It's not a minuscule percentage of those paying high levels of tax, and incentivising this group to pay less tax / cut hours / reduce their career progress is irrational - and points to our productivity issue.

'It doesn't impact many people' isn't a reason to accept a 100%+ tax rate on people. It's clearly unfair, and having a negative impact on tax take, parents ability to go back to work (if they have a higher earning partner), peoples longer term career prospects etc.

And - given the freezing of tax thresholds this will be impacting more and more people every year.

It's an ill thought out policy and given the Conservatives must think this is a group which might actually vote for them, their thinking on this is very odd.

'It doesn't impact many people' isn't a reason to accept a 100%+ tax rate on people

That’s what the WASPI women whose pensions were reduced twice said. It got us precisely nowhere. High earners with preschool age children are far more unlikely Tory voters than a bunch of women over 60. They don’t give a shit, there aren’t enough votes in it to make any difference.

The situation for WASPI women who weren't properly aware of pension changes is unfortunate but in no way equivalent to this.

I mean - the people with this childcare cliff edge issue / child benefit issues won't be getting a state pension until they're 70s (if, to be frank, at all). We are all being stung by the rise in pension eligibility.

You are frequently on these threads objecting to progressive policies for families, I suggest you do a little research into the cost of a mortgage and childcare for two at 2024 rates - we have some of the most expensive childcare in the world.

It is a failure of the state if it is unaffordable people to have children - let alone people who technically are very high earners.

It should be shouted from the rooftops, high inflation will bring more and more into child benefit and childcare benefit removal thresholds in the coming term.

I don’t need to do any research. It’s patently obvious what the situation is with mortgages and childcare. We have an adult child currently in the trenches. They recognise that it’s a temporary situation and they’ll be much better off when the youngest starts school. My sympathy is with families who have to deal with the same issue on much lower incomes.

If someone was working less hours and utilising tax credit / universal credit top ups because their family is better off, I wonder what response they’d get?

Total crabs in the bucket mentality @blossomtoes

Parents working full time should not be attracting 70-80% tax rates on levels of income like £50k because of a terribly designed policy of child benefit removal.

Single parents earning half the income of a dual household shouldn't be ineligible for a benefit, when a household with twice the annual income is.

Partners of high earners shouldn't be forced to stop working because of the removal of childcare support.

The cliff edge removal of childcare support means that those earning the highest incomes, they still might have to spend their entire salary on childcare costs. A loss equivalent to tens of thousands of income - privately funding what is one of the most expensive childcare systems on the planet.

The UK needs to work for everyone that lives here, and that involves creating tax policy (and child support initiatives) for people at all income levels.

If the middle classes are struggling to afford a family, the country is in big trouble. The gap between parents in apparently well-paid jobs and those with government support is getting increasingly small.

If someone was working less hours and utilising tax credit / universal credit top ups because their family is better off, I wonder what response they’d get?

the bus drivers did this in the 90’s

Single parents earning half the income of a dual household shouldn't be ineligible for a benefit, when a household with twice the annual income is.

I couldn’t agree more. Just as I disagree with the rest of your points. Having children is expensive and I see no reason why we should subsidise the top 1% of the population in the case of £100k+ salaries.

Youneed to re-examine why you're following your current career path. If it's solely because you can earn lots of money, well, this is just an inconvenience and you'll getire in the end,

You don't need to wonder. Lots of posts about that.

You still get the 30% left over though, right? Which is more than without the bonus?!

A) The top 1% earn over about £180k a year. To earn over £100k is now about 4% of earners

B) To be a net contributor, you need to earn >£50k anyway. So those people not receiving child benefit, tax free childcare etc are actually the people funding all of this. They are not being subsidised by anyone, quite the opposite.

'Why should we subsidise X' is a very dangerous line of thinking IMO. If you stop people being able to use the welfare state, access the benefits they're funding, you are going to find those people might lose interest in funding it.

Why is use of schools, hospitals, pensions, other public services universal - but not pre-school childcare?

Think about it.