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!

@JessS1990 services aren't paid for in proportions. Someone paying £50k in tax is putting in more than someone paying £20k, irrespective of what proportion that is of their salary.

All the current system achieves is getting the middle and working class echelons of society fighting against eachother whilst the truly wealthy are laughing all the way to the bank.

At every step there are incentives for all to earn less as they will be "better off". What does this do? Keep everyone earning less and no-one working their way up.

The truly wealthy will be entitled to all the "freebies" because they don't fit into any salary bracket. They are generally not salaried.

Remind me again. Why are all the tax payers wanting to support you, when you can damn well support yourself???? Welfare and benefits used to be for the needy. And if minimum wage was higher, and with universal credit, that would probably make Child Benefit payments the most stupid welfare payment of them all. Why pay benefits to someone regardless of what they can afford? It's certainly not to pay them to spend more time at home.

Arguably, means testing child benefit costs as much in administration as it would cost to just pay it to everyone.

If you can afford it, you could pay into your pension to bring your adjusted net income back under £50k. This should allow you to keep the child benefit. https://www.gov.uk/child-benefit-tax-charge

You will need to calculate how much to pay into your pension - you can add on the government's 25% uplift https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief. For example if you earned £60,000 you would only need to pay in £8,001 to your pension to bring your adjusted net income to under £49,999.

It wouldn’t if there wasn’t the option to claim it then pay it back. The admin costs would be minimal if it was just based on taxable income.

@hydriotaphia and others who are periodically suggesting this, it’s a long thread and the OP knows this. Elsewhere in the thread you will also see one of the points of controversy is that some people think this is outrageous behaviour and the OP should be maxing out her tax contributions as a public service.

If the minimum wage was higher, businesses might not be able to pay as many people 125k and that would apparently be a bad thing.

For all the criticism of the minimum wage being so low - the UK is actually 6th highest in the world - so it's not as low as people think. And why should someone who has worked hard in school and Uni and incurred the costs I highlighted not be rewarded for that and the particular skill set they have attained. Otherwise we are in a race to the bottom - where mediocrity is the name of the game. Why should I as a solicitor wind up over 200k worse off by going to Uni (as per the example I gave earlier) - if I'm only going to earn 55k - when I can simply become a cleaner and earn 33k (also as per my example earlier) - also minimum wage usually goes up each year - private sector pay rises are not guaranteed..... or how about this - we raise the minimum wage and then the companies pass on those costs to us consumers and we face ever increasing inflation and all that goes with that - challenges for people to feed their kids - and higher interest rates so higher mortgages...... and the expense that that brings. There is no perfect solution - but at the end of the day people have to be rewarded for the efforts they have put into their education and the sacrifices they have made.... in terms of time and money.

I guess you don't want any graduate teachers.

Last time I looked Teachers started on between 23k - 29k - got paid during their training and can earn overtime in many different forms. Progression can also be achieved - becoming Head of a Department or even Head Teacher which bring greater monetary rewards. Starting salaries for Solicitors outside London are 28k and go higher depending on the practice you begin with - Barristers start on 20k in London and less than that outside London - graduate trainee accountants start at 23k also which is less than the minimum wage!!!! It's often a long hard slog to the £125k's of the world...... and those which achieve it - make many sacrifices along the way- including working through a tax change limit!

There is also the option that if the minimum wage was higher - companies would hire less people and just make those they do hire work even harder!!! Therefore more people unemployed and even more benefits to pay and social housing to provide.....business is business and is there to make a profit!

£60k household gross income is almost double the average household income regardless of number of earners. So while not “insanely high earning,” it is still the privilege of a higher gross household income than 70% of the population.

Are you comparing like for like though? Because I know I am worse off now at £45k by £76 a month than I was at £30k. I'm in Scotland where the tax trap kicks in at £43k. At £43k you pay 40% tax and full NI. You also lose Scottish Child Benefit which is £200 a month.

At £30k I was getting UC top ups and SCB. At £45k (the equivalent of the £50k tax trap in England)... I get nothing.

So apparently on £30k I was poor enough for benefits and child poverty payments, and at £45k I'm rich enough to be in the top whatever % of earners and pay 52% tax, yet I'M £76 A MONTH WORSE OFF?!

Make this make sense please. People always compare wages and forget to account for the fact that if you're on £25k a year you'll get significant help with rent / childcare etc, which all disappears the more you earn.

It’s important to remember that people earning £50k-£150k like surgeons, anaesthetists, accountants, judges, etc. are the real problem and justified target of our ire and snarky comments and not the folks earning £250k+ per year or living off of large investments or trust funds who remain unaffected by any tax increases at all.

Pension contribution.

if you pay extra into your pension it’s deducted before taxable income is calculated and increases your pension savings

Let's see if the spring budget fixes this problem tomorrow, I certainly have my fingers crossed 🤞

You’re going to get awful cramp in those fingers, they’ll be crossed for a very long time.

Frozen tax thresholds are really starting to bite. I’m middle management and I think just below higher rate tax (on £54k but paying just shy of 10% in pension), a decade ago no one at my level was paying HRT, it was only senior management that hit it.

You don’t get taxed on the pension contributions saved but you will get taxed when you start to take money out of you pension. They’ll get it either way.

The only advantage of a private pension, over other forms of investment, is the tax deduction. The idea is that in retirement you will be in a lower tax bracket, so while they will get it either way, they will get less of it. Whether that justifies the the high fees and the general lack of flexibility is an interesting question. Until the government changed the rules a few years ago, a potentially positive aspect of the lack of flexibility was that the money was hard to dip in to and so reasonably securely locked away for your retirement, but now even that's gone out of the window to some extent.

YANBU

It's same with earning over 100k

Absolutely pointless

As I understand it, the 40% tax applies to everything you earn over 50k. It’s not 40% of your whole income...

There was a post not long ago saying how people were being paid top
dollar for not having any work to do.
Earning high doesn’t always equal hard work

Posts like this are so patronising , I’ve spent 6 years at uni to work in public sector job for 47000, these jobs need done, it isn’t as simple as getting a better paid job! Some people that’s their maximum earning ability and saying have less children when she already has 3 is silly. 50000 7 years ago was a great wage, we are in a COLC! Also saying just move to another area is very condescending, some people have high mortgages if they’ve bought in last 10 years

You've missed my point entirely!

this type of post doesn’t feel fair as it doesnt include enough detail.

• £12k would be way below the national min/ living wage so the fte salary for your role must be at least £22k. why not work hard ft if you want to earn more?
• what other income do you receive that makes your wage that someone on £50-£60k doesnt get? UC for living costs & housing costs & child benefit?

in my area, on stat maternity at about £700 per month, plus UC contribution to living costs at £580 per month, if renting up to £648 per month towards this & CB at £94 per month brings total monthly income to £2022.

for doing NO work & making almost no tax contribution to society that’s less than £400 less than my take home pay on £52k where I work >60 hours per week & pay significant tax to fund services and benefits for those that earn less, whilst having the same family responsibilities as those people.

I think it’s right that those that earn more pay more & support those that are unable to, but this thread makes it sound like those earning low wages for part time work are somehow doing the country a favour & those working ft on high wages should put up & shut up.