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!

Christ on a bike.
Are there really folk on £75k -£100k who are struggling?

I would love to know where these companies are that pay cleaners and other anciliary staff so well that they do not need government top ups to their wages.

We are expected to believe that they are so talented they are worth paying that much, but also expected to believe they are not capable of managing their money.

I’m inclined to agree.

Those companies don’t employ cleaners, they buy a contract. There are loads of them in Cambridge in Silicone Fen. That’s why you can easily pay £1 million for a terraced house.

Oh, so they outsource low paid jobs which no doubt are subsidised by the benefit system. How convienent and then they can praise themselves about how generously they pay everyone.

To be fair I think they do it because it’s far less hassle and those companies are lousy with PhDs with brains the size of a planet.

Ok so let me explain. Most big firms - Banks / Lawyers etc - will not hire their cleaners directly - they will contract out to a cleaning company. The cleaning company will then hire cleaners (making sure they take their cut) - and the cleaners will generally get minimum wage plus benefit top ups from the Government. The person earning £125k will not work for the same company as the cleaner coming in to clean - and I would be surprised if cleaners were earning (in general) above 23k per year (but would be v happy to be proven wrong on this) - and I would also be surprised if anyone at the cleaning company was earning £125k - so they could take a pay cut - that's not how the world works I'm afraid. And generally speaking - people get paid their worth - so a lawyer say may get paid £125k as it is deemed to be a skilled job - and it is also likely they had to incur costs to become one - student debt of circa 50k plus loss of potential earnings for 3-4 years while studying - a cleaner is not deemed to be a skilled job (if you wind up falsely accused of a crime a cleaner cannot defend you) - there is a difference - whether you like it or not. And if you are going to pay a lawyer with long hours in a stressful position - 55k - but a cleaner 33k - then why bother be a lawyer? Once you add on student debt repaid at 7% interest - and the hours worked they would not be on much more than minimum wage themselves (as the Barristers who went on strike recently highlighted). Highly skilled jobs are rewarded in this manner because entry costs are high - working conditions are stressful and hours are long. Also the lawyer will have no benefits - no tax free allowance - no children's allowance - no rent allowance and the cleaner who is earning less is also receiving benefits which they are not paying tax to earn. And the tax the lawyer is paying equals 7 cleaners on 33k.

They outsource the contract yes - but it's the cleaning company who fulfils the contract who decides what cleaners get paid and who probably hires them all on zero hours contracts to keep their costs down and maximise their profits. They could decide to pay their cleaners more if they so wished.

There seems to be a lot of people but women in particular who quite naturally want to work maybe 15- 20 hours a week and have more time for children and family stuff but then get snarky at someone working full time with 3 young kids and earning very good money. Unless you have a hugely well paid profession then you really can't have it all ways-

Personally I wouldn't be in for working full time with 3 young children regardless of if I dropped off the promotion hamster wheel - but OP has already said her H isn't well paid-

Personally I would be looking at him being part time if money is an issue .

Just one further point - say a student goes to Uni for 3 years to study to become a lawyer - meanwhile your cleaner in Utopia is on 33k a year - so that's 99k the student could have earned while they were studying. Now on top of that - they leave Uni with say 70k student debt - which is a bit on the low side - as it assumes the student can rent - pay bills - eat and travel for 3 years on roughly 16k a year. Current interest rates on student loans is 7.7% - paid back over a 15 year period - that works out to be £120k to be repaid (more if they take longer to repay) - so that's almost £220k - the student has to earn before they are in any way positive on their education....... or equal to the cleaner - who by now has been working for 3 years and doesn't have a debt (with interest) of £120k to repay. And the student will not start on £125k - far from it - a good starting salary for a trainee is probably 40-50k. And they will find it hard to buy a home while they are saddled with student debt..... so it's not all roses for those who later in life climb the corporate ranks and get to earn £125k.

Not bad with money but 3x maternity leave, 3x nursery fees, mortgage to pay....

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

^^This.

I get that the OP maybe doesn't want to pay her student loan back faster than she currently is, but the only disadvantage of having to do so is that she gets less benefit from her pay rise now. That extra £800 means the loan will be paid off sooner (so she will stop paying 9% of her income sooner), plus she will save having to pay the interest on that.

So, given that the debt is there anyway (the debate over whether student loans are a good idea is separate), this extra payment is more of a forced saving scheme than a loss to tax, and I don't think it's really correct to include this in the OP's calculation of how much of her pay rise is "going in tax", which to me implies "you'll never see it again".

He won’t be paying all of it back at £50k though, it’s tapered so you pay a very small amount at £50k which gradually increases depending on your income and at £60k you’d have to repay the whole amount

Cgt is only 20% (10% within basic rate) it’s just 28% on residential property.

The ‘’get a better job’’ rhetoric always makes me eye roll 🙄. In theory it makes sense, but If everyone did, or indeed could get a better job, then two things would happen.

1. society wouldn’t function for a lack of lower paid workers. No factory workers, no bin men, no cleaners, no public transport drivers etc and;
2. Those higher paid jobs would no longer be as highly paid anyway as more people would have the skillsets needed.

People’s financial situation isn’t always easy to change and being in a low paid role doesn’t make them unambitious or lazy. I Sympathise with OP’s predicament, but as posters always tell low earners, sometimes you have to cut your cloth accordingly!

Just to keep it factually accurate. It is not possible to go to uni to study to be a lawyer.
One can study a law degree, after which one would either have to take SQE or Bar exams, which means a year or two more of studying.

Dividend Tax is 23% I think (could be less) - no matter how much you earn.

Let's be a bit clearer on dividend tax rates - less and more and it does depend on how much you earn - still making stuff up is less effort than finding out the facts - which change continually, so always best to check. 😎

• 8.75% for basic rate taxpayers.
• 33.75% for higher rate taxpayers.
• 39.35% for additional rate taxpayers.

So the company still employs cleaners on the minimum wage only indirectly.
Thank you for clarifying that important point.

It does not change the fact the company has a choice as to whether to pay all its employees enough to live on without government subsidies or not. It is then a bit of if the company makes that choice and those who are paid more than they need then complain that their taxes are used to pay benefits because they are paid instead of others being paid.

You could just get a higher paid job then if it’s so easy for OP and she clearly doesn’t work harder than you? Only yourself to blame that you don’t earn more money really, if you want it go and get it, don’t berate others who have done it.

The Guardian has an article on the struggles of £60k+ households. It is clear that it is not benefit claimants' fault. It is mainly the high cost of housing (rented or mortgaged) and childcare.

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Pay into your pension the excess as an AVC and then take yourself below the threshold. Can change it when rules change, though this may be in the budget this week?

Unlikely. Someone on 23k with two kids would be entitled to UC top up. It could be quite substantial depending on childcare costs, whether they rent and where, but even the basic child element would be payable.

Unless of course the household has enough other income to render them ineligible, but then of course that too would make the 10% claim incorrect.

I'm friends with a person like this and it's tedious to hear about how hard it is ... whilst living in the capital, owning a huge house, doing extensive renovations, going abroad for holidays. People seem to see these things as essentials, not privileges. It's not a list of must-haves, cut your cloth.

We have an income of £50k between us. We don't have money to save but we do go on holidays and go out to restaurants etc. I don't feel poor