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!

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

Because preschool childcare is a choice.

To be a net contributor, you need to earn >£50k anyway.

That depends, doesn’t it? If you’re a childless, healthy person of working age you’ll be a net contributor at a lower salary point.

No one is forcing you to work the hours you work. If it is financially better to work less hours, work less hours.

before returning to work after mat leave I did a spreadsheet and worked out the optimum hours. Working 3 x 9 hour days is worked best, financially, so that is what I did.

So, the answer is, work less hours!

Preschool childcare isn't 'a choice' for the vast majority.

For people to afford to pay their bills, have a home etc, you need two wages in this day and age.

It's funny that you on the one hand think it's unfair for women to not be able to retire at 60 supported by the state potentially for 30+ years... but simultaneously don't want people with children to have any state support wile they are young, as that's 'a choice'.

We need to invest in the future of the country, not just endlessly funnelling money into the pockets of pensioners.

There is an effective tax rate of 60% when someone goes over £100k, actual tax rate is 40% but they also lose £1 of person allowance for every £2 above £100k, the tax due on each £1 over £100,000 works out to 60% until full personal allowance is lost

Of course it’s a choice. Nobody holds a gun to people’s heads to force them to have children.

It's funny that you on the one hand think it's unfair for women to not be able to retire at 60 supported by the state potentially for 30+ years

I don’t think that. Equalisation of state pension age was the right and proper thing to do. The issue is that all the women affected by two changes in 15 years should have been treated more fairly. The random nature of the process was bizarre - a whole bunch of women of similar age had vastly different retirement ages - I missed out on three months’ pension by seven hours!

Give it a rest

So what do you propose then, no help for anyone with children at all because ‘they haven’t had a gun to their head’?

Allow children to grow up in poverty, women pushed out of the workforce, an even further decreasing birth rate (We went from 1.55 to 1.49 just last year).

And as for the introduction of pension ages being random - incredibly annoying yes, but as is the case on student loans (no time for parents to save), the sudden inability to afford housing due to inflation of asset values etc. I have a friend who took a loan out to afford to go back to work with 2 under 3 - and now the free hours have been introduced for example.

I think it’s odd you think your issue should have been managed better and be treated with more empathy… but this? These women ‘didn’t have a gun to their head’. More empathy for others situations required here I think.

You’re just being utterly ridiculous now. I don’t believe in subsidising the child care of people earning £100k+. I do think people on low incomes should have subsidised childcare. I do believe single parents are unfairly treated. I really can’t make it any plainer than that so please stop with the “So you think …” when I’ve said nothing of the sort.

This particular bottleneck is. But you miss out two important parts of the picture.

The first is that because of inflation and fiscal drag, the numbers are going to increase if nothing is done. That means more people facing a situation that can be an incentive to work and earn less, which is a problem in a society with our worker shortage and tax base.

The second is that it's only one of a number. Taken in isolation, a specific example such as the one OP faces, someone who doesn't take more hours at work to avoid going over the FSM threshold or the 30 hours free childcare threshold won't affect a lot of people no. But we have lots of these, sprinkled across the income spectrum. It's a potentially substantial problem, and it does no good to focus on only a single one in isolation. We need tax and benefits systems that address this.

You've said having children is a choice and parents don't have a gun to their head.

I do not understand why it is reasonable for a parent earning <£100k to get childcare support, while parents earning >£100k get nothing.

As has often been repeated on these pages - this meaning someone earning £99k is better off than someone earning £140k if they have two children. And - they will still be spending 80% of their income on childcare.

You are not giving a rational answer to exclude these people from accessing this benefit other than how you feel about it emotionally. You comment on these threads about this issue frequently and there are gaping holes in your argument, so you cannot be surprised people are challenging your view.

Yes, you have all the right to be upset as it is absolutely ridiculous!
The worst is when you earn over 50k as it won't allow you for any essential help and have to pay an insane amount of tax. Earning 50-70k these days is not as glamorous as some people might think- governement should really acknowledge this!
I will also go back to part-time after my maternity leave for this exact reason. Don't see the point to work my arse off, miss time with my family while I would basically earn the same with part time.

I expect to have my view challenged @MidnightPatrol. It would be a very dull world if we all held the same opinions.

I'm afraid I don't really understand your point.

You're still getting 30% of your bonus? And you've had three babies, I assume using NHS resources and will (if you're not already) using educational resources? So probably a bit of a balance of resources used and paid for (you can literally see this if you log into the Governent Gateway thing btw, it'll tell you how much of your tax is allocated where).

I mean by all means, cut off your nose to spite your face by putting it into your pension - you'll benefit then but not now from that extra cash.

And PS - I'm earning about the same as you, just commented actually on how I had to pay back most of my child benefit from last year and am no over the threshold. Difference being I guess that I am out of the childcare years so can see how the pain of childcare really is a short-term pain that must be borne out. And my husband earns just over minimum wage, but only for the last year. He was a SAHD for years as my earning capacity far outstripped his.

Stamping your foot and staying home when you don't really want to just to get child benefit isn't the answer. I can't tell if you want to or not.

You are not giving a rational answer to exclude these people from accessing this benefit other than how you feel about it emotionally.

She's plenty of company. It's very often what happens when we have threads about the existence of disincentives to work more and the way people respond to them.

Posters who don't like hearing it tend to focus on why they think the people concerned should behave differently. When the discussion is about those on a low income, the response will be about self sufficiency and scroungers. When the discussion is about child benefit or free nursery hours, the response will be about need and greed.

Meanwhile, we continue to face a shortage of workers and skills across many sectors plus a precarious looking tax base.

Stamping your foot and staying home when you don't really want to just to get child benefit isn't the answer. I can't tell if you want to or not.

Why isn't it? Dropping some hours, whether accompanied by a foot stamp or not, may very well be the answer when a person is presented with a situation where the benefits received for working don't justify the effort. OP has a number of factors to weigh up.

Its a massive issue. Also for those of us earning over £100k we are paying an effective rate of 62% up to £125k (with the loss of the personal allowance) and on top losing all childcare assistance.

Its all well and good saying put it in your pension but some of are already making provision for our future and need the money today.

I have no problem with payment of fair share - but 62 % (i think it is 67 in scotland) isn't fair and is totally out of kilter with most western economies and way too complicated.

That’s the key difference though isn’t it - you’re out of the childcare years and I’m in the thick of it at the moment. So it therefore makes more sense for me to choose to work less as the financial difference is negligible for the additional amount of stress 5 days vs 3 would be.

I’m sure when I have all three at school or at least eligible for the 30 free hours in 2025/6 it will make more sense to up my hours, but while it’s not I may as well make the choice to work less and be around more. If the child benefit wasn’t needed to be repaid (circa £3k a year for three kids) it would influence my decision, but it really feels like a double whammy when also creeping into the higher tax bracket.

Anyway, I don’t really believe I’m ‘stamping my foot’ as you’ve put it, I’m just more puzzled by the government and reassessing my priorities!!

You don't pay an insane amount of tax. You only pay the higher rate on earnings over the higher rate thresh hold.

but you're not paying 62% on it all. You only pay the higher rates on money over the threshhold.

Don't get me wrong. I think child care costs in this country are completely ridiculous. When I went back to work after my second, until the 15 hours for my first kicked in, I was paying more in childcare than I was earning!

When the discussion is about child benefit or free nursery hours, the response will be about need and greed.

That’s a perfectly rational response. If additional money’s going to be given to anyone I’d prefer it to go to single parents - who get a really shit deal at all income levels - and/or people who are really struggling. Not those with very high incomes who can afford to work less to minimise their tax deductions. That’s not an option that’s open to someone on minimum wage or an average income.

Well, your kids won't be young forever.

Student loan is a debt you took on and will be paid off one day.

Child benefit - reasonable to focus this on lower income groups.

Payment of tax - who do you think should pay, if not high earners?

Payment of tax - who do you think should pay, if not high earners?

Far too much on PAYE though which is part of the problem vs other income

Nah, it's not.

You've assumed that single parents and people with incomes high enough to be affected by either the child benefit bottleneck or the 100k hours are two separate groups. They are not. You even admit yourself that they get a shit deal at all income levels, and yet posters who piously froth about how their hearts bleed frequently fail to exclude single parents caught in these income traps from their complaints.

Additionally, the sweeping claim about what options are affordable to who is is silly when people on average incomes experience such wildly varying housing and childcare costs. That's true in any discussion about affordability and choices.

And lastly, it inherently ignores the underlying problems with our tax system. The fact that you've not even mentioned what might have the most positive impact on tax take or the worker and skills shortages we currently face says it all. It's another example of people refusing to think beyond where their sympathies lie. Merely making that assumption at all is a logic fail, even if you'd done a better job of it.

Where do you think these 60 / 70 / 80 / 90 / 100% tax thresholds should be kicking in then?

As this is what many high (and not so high) earners are facing at present.

The fact that you've not even mentioned what might have the most positive impact on tax take or the worker and skills shortages we currently face says it all.

To be fair you haven’t either. Maybe tell us your ideas instead of constantly making personal attacks? It would make for a much more interesting debate.