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!

Put it all into your pension it's the only thing you can do to avoid the extra impact. Do this every year. You'll thank me when you retire :)

OP is correct. For single parents who lose their child benefit, the tax man takes 62p of every £ earned between £50k & £60k.

It is grossly & utterly unfair.

As a single mum in that income range, I pay a higher rate of tax than Rishi Sunak with all his millions. I'm starting to really resent it.

I pay anything over the higher tax bracket into a pension. The money might not be in my pocket now but I'll benefit eventually and it keeps my tax at 21%.

The newspapers are reporting on this type of senario as the budget comes closer. Fingers crossed something happens.

Stick as much as you can into your pension, or work part time. Once upon a time child benefit used to be Universal, but the Tories introduced means testing.

Idle and/or claiming benefits. The two are mutually exclusive 🙄

There's been a lot of pressure on Hunt to address this mess in the last couple of months. Martin Lewis has been leading it. But there were stories last week that a Treasury source said it wasn't happening sooooo... who knows? The Tories don't have a brilliant record when it comes to addressing problems they created!

Tax is tax isn’t it. We can’t run the country on zero.

With that in mind, it's obviously not good policy to have tax systems replete with marginal rates and cliff edges that are an incentive to earn less?

If they’ve already got the children there’s not much they can do about it is there? That should be ‘fewer’, rather than ‘less’. This government is constantly telling us that they want a high skilled high earning workforce but they put huge obstacles in the way. If HMRC collected the estimated £35bn+ in tax that they fail to collect then we wouldn’t need such high personal taxation.

I’ve managed to get my £70k salary down to £52k with the deduction of pension contributions and a salary sacrifice car so keep most of my child benefit now! Totally understand, it’s frustrating but I’d still rather be in this position.

I was a single mum on tax credits. Kids got older so I was able to work. Now my salary has gone from 18k to 56k. I worked hard and job jumped and I thought finally! I’ll be ok! Then cost of living crisis has come in. I am better off but not as much as I thought i would be. Mortgage gone up by £400 and I still have to feed hungry 20 somethings

I don't understand why if a person earns so much, they are throwing their toys out of the pram over a benefit worth £1330. We can't keep paying benefits forever and not expect taxes to not rise.

It’s £1331 for one child, £2212 for two or £3095 for three children a year.

For someone creeping into the higher tax bracket that’s the equivalent of working for around £5200 before tax so it’s quite significant.

Salary sacrifice into your pension
or if you have one use a share save scheme
see what other salary sacrifice options you have at work too
the student loan won't last forever
also if only just over 50k you shouldn't be paying 2k back for child benefit so double check your maths on that one
however if you want to do fewer hours and can that's your call

The issue is that between 50k and 60k there is a crazy cliff edge in effective taxation especially when child benifits are concerned
With 3 kids it's actually even worse plus student loan takes your marginal tax rate to over 80%!
Yet this drops significantly at 60k and drops again as you earn more

In a truly fair tax system there should be no sudden cliff edges (there is also one much lower at the point working tax credit stops)

It's only fair that higher earners pay their fair share of tax to allow essential public services to be properly funded . But the cliff edges absolutely need to be smoothed out

That’s really disingenuous because if it was earned money it would be taxed, whichever way you get it it’s worth the base amount.

Cry me a river

@daffodilandtulip

Because its unfair.

Unfair 2 x 50k get it all and 1 x 60k gets none!

You don't actually need to understand why people are taking a course of action, though. Only that the incentive to do so exists, and that some respond to it by working less, paying less into the pot and reducing the labour available to us as a society. Did you know that there are also situations where people who earn less than the OP do it?

Because it means a very high marginal tax rate on earnings £50-60k.

Take home on that £10k is £5,128.

Less £2,212 for two children it’s £2,916.

So a parent earning with two children attracts a 71% rate through PAYE on earnings £50-60m.

This is not rational and a disincentive.

Ffs, life’s unfair. I can’t believe there are people old enough and bright enough to earn a decent salary and have kids and they haven’t come to terms with that basic fact of life.

Ok take any action you like ... I don't see why they need to moan about it when half the country are on their arses.

Same as paying back student loans, everyone moaning about that on here too. It's all about the choices you made. You're paying back the student loans because you had thousands of pounds worth of education to get you where you are now. You're paying a big mortgage because you chose to get a big house or live in an expensive area. You're paying a big childcare bill because you chose to go back to work.

People in these wage brackets aren't struggling, they're living out their own choices and sulking because other people are getting "handouts".

I put everything over the threshold in my pension. It means I haven't seen any increase in take home pay for about 10 years. But the advantage to me is that I have a lot of money in my pension and can probably retire at 55. I'm also not used to having lots of money so will be able to retire on a smaller amount.

In many ways this has benefitted me, but I don't think it benefits the economy as if it wasn't for the cliff edge threshold of losing CB and paying 40% tax I would have more money to spend, pay more VAT, boost the economy, I would also retire later so spend more time earning and paying tax. It's short sighted from the government in my opinion.

Currently high earners such as the Prime Minister pay a smaller proportion of their income in tax than teachers and nurses do.

Perhaps that is an issue that needs to be addressed?