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!

It’s not nonsense. It’s life. 🤷‍♀️

However the way the system treats single parents goes beyond unfair, it’s illogical and ridiculous too.

People talking nonsense is part of life yes, they're not mutually exclusive. So to clarify, would a single parent pointing out unfairnesses in the tax system be able to do so without you FFSing because they haven't 'come to terms' with it and that's reserved only for those with partners?

You clearly dont work full time for 12k a year.. Get a full time job and you will earn alot more.

Yes. Happy now? Any thought about how the system could be made fairer for single parents or are you just going to keep posting aggressive comments on my posts?

As others have said, massive tax savings if you contribute via salary sacrifice. Earners over 100k avoid the 100-125 60% effective tax rate due to the loss of the personal allowance. You can take out 25% of your pension tax free at 57. Also the power of compound interest if you start contributing early

It’s based on taxable income and you can adjust for pension & charitable contributions when you do your tax return.

lets see if anything comes out of the budget today to help.

But in summary, you have to look long term...and strive to make as much as poss. as childcare will not always be an issue for all your life.

but if in the short term you feel to spend more time at home. dont feel guilty. just do it

If you are already at the point of getting no benefits (except child benefit), then given tax/pension/NI etc is never going to be 100% you'll always be better off earning more and I'm not sure how people can argue otherwise.
But if you're looking at the difference between maybe someone on 28k who gets UC, 85% of childcare paid, etc then I can see how someone on 50k who gets none of that would be worse off once they've paid for everything that the person on 28k gets help towards.
Also once you get to the 100k mark and lose 30 hours free childcare you'll most likely be substantially worse off than keeping your wage under 100k.
Both those situations are really unfair but completely different to the 50k+ situation mentioned here

The time when you could've called anyone else aggressive without being snorted at evaporated with your FFS.

Still though, I'm glad we're getting constructive now. Better that you're grown up about some of it than none at all, don't let the perfect be the enemy of the good etc. The quickest way to address the system that could be done today would be to raise the threshold in line with inflation to alleviate the 50-60k bottleneck. I agree with you that for single parents, longer term structural changes are needed, and I'd also include in that two parent households that will always be one income due to one parent being unable to work due to disability or being a carer. If the earnings cap on child benefit continues to exist, which it doesn't have to, single parents should be exempted. There is also the discrimination in relation to personal allowances to address. There is some potential for abuse of the system, but then that's the case with UC as well.

While I see what you are saying if you had a payrise of £6k, 2 kids and the choice of:

1. putting an extra 3k into your pension & taking ~3 weeks of unpaid parental leave in school break OR
2. getting £3.5k cash but losing 60% of your child benefit AND paying £1k+ in childcare fees beyond what you’d spend at home with kids for the 3 weeks so ultimately being about £100/month better off in cash terms now and worse off overalll if pension considered

What would you do?

Why would anyone be surprised someone in this bracket might rather work part time, take unpaid leave &/or plough into their pensions to facilitate early retirement rather than end up with about 20% or whatever they earn between 50&60k available to them to spend.

It’s the exact same scenario as people not wanting to work more hours as they’d be worse off not getting a certain level of universal credit because the taper is so steep

Not read the whole thread, I have to admit. But you have to look long-term on this. If you work very part-time, what will be your chances, eventually, when children are at upper school, and leave home- to go back to a senior job. In many jobs, if you don't keep up when children are young, you totally lose your place on the ladder forever, as skills, technology, etc, keep moving forwards.

This has really long-term implications for your post mother career, and eventually, your pension. So many women react as you do- and it is too late by the time they realise they have lost all realistic chances of a great career post motherhood, and a decent pension eventually.

When I went back to work, it almost cost me to work, as I had to have a full time nanny due to working hours, meetings, occasional travel off site or even abroad. The cost was crippling. But I stayed on the ladder and even went up a bit, and when the time came, I was ready to break that glass ceiling and get a really decent salary. And at 59, my pension forecast is really good.

Surely the value to society of parents spending more time with their children is far greater than the loss of tax income?

No worries let’s have everyone who would earn over 50k cap their hours to make sure they stay below and see the impact it has on your life

I get what you are saying OP my husband's earnings are over the threshold and we are now in the third year of paying back child benefit. We also are supporting our eldest son through university. I work in the public sector so do not earn over the threshold. Why should we be penalised for my husbands earnings when a couple where both earn just below the threshold would receive CB? I see friends who receive CB having multiple foreign holidays, driving new cars and telling their children they can't afford to support them through uni. We choose to priotitize our children, others don't. However, this is a first world problem and we should be grateful we have these choices to make.

YABU - that's a nice bonus - you get to pay off some of your student loan.
That's great if you get to keep 30% of it then perhaps you could pay off some more of it. Lots of people would love to have a £9k bonus !
Why do you get child benefit if you have to pay it back ?

The time when you could've called anyone else aggressive without being snorted at evaporated with your FFS.

Difference is it wasn’t directed at a single poster. However you continue with the personal attacks, people will draw their own conclusions.

If the earnings cap on child benefit continues to exist, which it doesn't have to, single parents should be exempted. There is also the discrimination in relation to personal allowances to address.

That’s exactly what I said. But identifying genuine single parents and preventing abuse would be a huge problem. You only have to look at the gymnastics people already go through to “beat the system” to see how many single parents would miraculously spring up like mushrooms. I wish I knew what the answer was.

I help out at a mental health hub and although there are some people who are very much in need of benefits and totally deserve them there are also (from what I see) quite a lot of people who have spent their lives milking the system, not working, living off benefits. From what I see, in comparison to me and my husband who have always worked, and not been very well off but not poorly enough off to claim universal credit or any other benefit other than child benefit when the children were younger, the benefits system is, in my opinion, extremely generous, and those who are able to claim additional benefits because of their mental health issues which may or not be genuinely severe, have a very good standard of living with a relatively large disposable income (in comparison to me) which they spend on eating out, takeaways, holidays, clothes. I know here on MN it is frowned upon mentioning benefits, and I am not bashing people who are in genuine need of benefits, but there is the elephant in the room which is that there are a lot of people who don't really need benefits who are able to claim benefits, and not work, and have a very nice life.

If you don't want to pay higher rate tax, (fair), just wham it into a salary sacrifice pension, or if that's not available, get a SIPP and do that (make sure and claim the higher rate tax relief via your SA Tax Return)

Yes but some people are paying a lot towards that tax pool while people earning decent but near threshold avoid that extra tax and also claim child benefits.

Child benefits should be for those near minimum wage, below national average salaries, not for someone earning 50k.

If we go by your logic, child free should have their taxes lowered because they never use public childcare and schools.

If you get to £100k it’s no child benefit or tax free childcare either…

I'm generally sympathetic, nobody enjoys paying tax (well if there is such a person I haven't met them).
Taxes are basically a subscription for civilisation, that's how I look at it. I don't sweat it too much (similar income as you)
If you want lower or zero taxes, there are countries that are like that (generally with lower or zero public services and higher personal costs due to that). You can vote and even campaign to turn the UK into a low tax or zero tax country, also fine. And you can let off steam online about taxes (cf this thread) - that's also completely fine.

Aside from this being a huge first world problem, yes. Rethink your life, and priorities. Do you need to earn over £50k? What do you benefit by working full time? And whilst you're working full time and losing so much to tax etc, you're paying someone else to raise your family.

The concept of 'enough' is one that's too often ignored. If you can reduce your hours/income to £50k you have enough to live on without hardship, and are spending time with your children and not working so many hours that you're exhausted, this is surely optimal? What's the point of working 5 days a week and hardly seeing your children?

Money isn't everything, as long as you have enough

@Harry12345

Another benefit of my pension scheme is if I die before 75 I can leave it outside of my estate and it doesn't take any of my IHT banding.

Whilst I hope that reason never applies, if it does Im.giving it 45/45/10 to our kids and then husband (as my husband has a decent employer pension provision), and they will be able to use it including the option of keeping it as a pension pot for themselves.

It’s possible it is & will doubtless in part depend what you do for work. For us as a family though I feel like there is a significant benefit for kids to get time off over the holidays with one of us when we just chill and potter at home. Usually my husband takes Easter and I take time in the summer and then we do half terms individually too with a family break at Christmas and a summer holiday. It takes us down to kids only having a couple of holiday weeks a year in paid childcare and lets us have the odd day off alone as well.

The point I was making is it’s unrealistic to expect people to act against their own/their families best interest.

Pretty much everyone I know with children who earns 50-60k puts into pension &/or dropped hours temporarily. It’s because overall they are actually financially better off that way &/or because the relatively small gain they would get doesn’t feel worth it vs chance to spend more time with kids. It might be that there is an impact to career. I haven’t seen that myself but then I always had rather limited ambition.

Likewise, if you continue your attempts to tone police after your previous contributions, people will draw their own conclusions. Glass houses etc.

It is true that preventing abuse is a problem, but that's true of the whole tax and top up benefits systems. It's a problem today. There are single parents now who have both a UC claim and are affected by the child benefit threshold, and we still run those parallel systems.