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!

I don't know, I'm not the chancellor.

I do know child poverty is growing through. And it's not because mummy has to pay 70% tax on the last 30% of her annual bonus.

I did my self assessment to pay the child benefit tax charge due to going over this year. By the time I’d entered my gift aid charity donations hmrc owed me money instead 🙄

These threads are like Groundhog Day. Same unemployed and retired posters on here ALL day explaining how paying 70% marginals is acceptable. Not thinking long-term about how this is a vary precarious issue wrt to tax take and state funding. Madness.

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

Nonody should have subsidized childcare - everyone should earn enough to pay their own - which means companies are using the giverment to shore up its workers.

By giving you a temporary pay rise with under 3’s you are grateful, but that money should be in your account every month - paying your own way.

This was the worse thing the labour government brought in, keeping the lower paid in lower wages and expecting them to be grateful for crumbs.

You only pay the 40% on everything above £37k

I mean drop your hours by all means, I got the sense you didn't actually want to do that though, but were saying it was an option as then you get to keep the child benefit? Is the child benefit equal or more than the amount of bonus you are getting? Is the amount your husband earns equal to or more than the amount you're paying in childcare? Because surely it would make more sense for him to reduce hours than you?

But it's up to you of course. Whatever you think is best. Personally I wouldn't do part time in my role as I just know it would mean I'd be working out of hours which I am not willing to do.

Assuming you dont work full time for £12k per year.

I'm sorry and I know I'll get flamed for this - but this is exactly what is wrong in the UK - and why we are in such trouble economically - people just refusing to maximise their potential. So why work and contribute more to the tax coffers when you can get the tax payer to sudsidise you with child benefits etc.... surely your student loan is payable regardless of how much you get paid - and because of it you are in a better paid job! It annoys me when I see people complaining because their salary means they pay more tax - of course you do - it's proportional - why don't you go full time and aim to get your salary and therefore bonus above the 78k or start making massive contributions to your pension for when you retire and reduce your tax liability - (or do you expect the future tax payer to pay 100% for that as well) - or invest the extra into an ISA and make back a bit extra on interest tax free....... people like this baffle me - and the next thing they'll say is how expensive everything is..... and how the cost of living is impacting their lifestyle..... but if more people don't step up and go out to work - this country will be absolutely finished in 10-15 years - economically we are sitting on a time bomb!

Hardly, the idea that we need to be considering these things specifically and giving them much greater priority than people's sympathies is my whole and repeatedly stated point.

But don't just take my word for it, some good stuff about the importance of addressing our marginal tax rates problem here. The mention of child benefit is about halfway down.

https://www.resolutionfoundation.org/press-releases/britain-needs-better-taxes-rather-than-just-higher-ones-to-boost-fairness-and-economic-growth/

Notice there's nothing in here claiming that none of the people involved are single parents.

Here's a report from the Resolution Foundation on the particularly perverse incentives faced by those families who both face child benefit withdrawal and receive UC, a small but growing group.

https://www.resolutionfoundation.org/publications/inconsistent-incentives/

They characterise this as a problem, a serious design flaw and something the government will have to fix.

This is a year old now, but the situation hasn't materially changed and it gives a useful range of examples across the income spectrum. It specifically mentions taxation as a reason for middle and higher income couples finding work not to be financially worthwhile.

https://www.theguardian.com/business/2023/feb/13/full-time-part-time-work-no-longer-pays-uk-economy

There's loads more, these are just the ones I found quickly. Presumably the existence of a tight labour market, skills shortage and the principle that it would be good if we could fill vacancies are generally agreed?

Oh I forgot this, here's a Treasury Committee report, drawn up by a multi party group, discussing cliff edges and explaining why they're a problem.

https://publications.parliament.uk/pa/cm5803/cmselect/cmtreasy/1425/report.html#heading-0

You are incorrect here. The PM pays less tax as a % on what he earns because it comes in the form on dividends and capital gains not PAYE - his PM salary will be taxed as normal under income tax rules - but because the vast proportion of his income does not come from salary - he will get taxed differently at 23% - giving him a much lower rate. I pay my highest rate of tax at 47% (45% + PRSI) - so it's trending towards the 50% - which is quite a high proportion - I don't get a TFA - so start on 20% for the first £1 I earn..... it's all v well to sl&g off high earners but they pay the brunt of the tax bill in the UK!!!!

Don’t forget National Insurance of 2% employee and 13.8% employer adds 15.8% to your tax making about 85% in total- so we are in a socialist state.

Yea. It is a problem. I don't think it will be fixed except that public services will keep declining until someone decides that assets need taxing appropriately.

That's tax planning, not tax dodging. The government actively want people to save for their retirement which is why there are tax incentives to encourage this.

*hellsBells246 · 02/03/2024 22:06

Astonetogo · 02/03/2024 21:14

See, this is part of why our public services are so crap, people earning plenty are dodging paying tax by sticking it in their pensions and hanging onto benefits they don’t need 🙄 Edited
Funding your own pension is not dodging tax, ffs!!*

@hellsBells246 spot on.@Astonetogo Do you also think that any person not working or working under full time is ‘dodging tax’? After all, if they worked or worked more, they’d earn more and put more in to the tax system?

"There’s NO point earning over £50k?!"

I'm fortunate that earning under £50k is something that I have proved to be extremely good at. Go me.

*Agreeable · Today 09:30

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.
Show quote history
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?*

love the phrase ‘for the greater good’ @ThisReallyDoesntAddUp it really does sum up some of the attitudes here. it’s work, not slavery. You are making legitimate choices. I’m not sure why one section of society has to make their life choices based on the greater good and others are not held to such standards. I hope all those with this view give stay at home parents a good dressing down for their failure to deliver fully to the taxation system!

I’m really interested in this because DH is now just shy of £50k and I’m creeping up. Child benefit is hardly anything though so would it really have that much impact?

Unless you're in London, that amount is pretty comfortable op. I speak from experience as I was on pretty much the same money for the same hours, with the same number of children and also the main earner in our relationship. We were still able to save £2k per month and overpay the mortgage by £10k per year for two years. The four day working week was heaven. I didn't have a company car and had to fork out for MOTs and maintenance on an older vehicle, though. I'm afraid I don't think you have much to complain about.

For context though, it's a good job I did earn all that. I'm currently unemployed and claiming job seekers! So I really have experienced both ends of the spectrum and don't begrudge paying taxes that have ultimately helped me and my family put food on the table in harder times.

In my experience, there are few women in leadership positions who work three day weeks, op. Be careful if you seriously plan to try that or you may find yourself designed out of the organisational structure. It shouldn't be that way of course, but it is. Leadership job shares are rare as rocking horse shit.

It’s £1500 a year for two children. Significant for low income families.

It’s £1500 a year for two children. Significant for low income families.

And less significant for people earning £50k

I am confused. You say I am incorrect, and then go on to demonstrate the Prime Minister does indeed pay a smaller proportion of his income in tax than teachers and nurses do.

😂 people like this are paying for people who don’t work. Yes we love the sacrifice of all our hard work going to pay for other peoples lives. If there weren’t high earners then there wouldn’t be anyone paying the benefits you all love. I find it strange everyone is so jealous and unaware of where the money comes from!

If there weren't high earners, perhaps there would be more money to pay those who work but also have to get benefits from the government?

40% is only on income above £50k unless your income is above £100k and you lose personal allowance