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!

That’s because we have incompetent, greedy politicians who have chosen to make it dysfunctional.

Aw thank you! I'm glad this has worked out so well for you.

It's just gone up from £50K to £60K so you're in the clear now.

Works out well for us personally this year but it’s still equally unfair for single parents.

I wonder if they do change it to £60k per household next year how many families will lose some/all of their benefit. I could be misremembering but think I read 170,000 households will benefit with the uplift. Presumably many of those with 2 working parents will lose it again in 2026.

I would think that if they make it household based then they will need to increase the limit but who knows what will happen

Each to their own, but in my opinion that’s not going to get any better by paying less tax.

We actually pay less tax in the UK than in many European countries where their services perform better. Given the state of the UK, we should probably be paying more, not less.

Which is why we need to get rid of perverse incentives to work and earn less. Like the one OP was describing, albeit that now won't affect her thanks to the change in child benefit thresholds.

Im not on the side of this gvt in this discussion!

Good! This is a government who've been in a decade and a half, had plenty of opportunities to tackle the various bottlenecks and cliff edges in our system, and have if anything made them worse. We need to address their failings, because we can't afford to disincentivise people from working. And expecting them to be fine with huge marginal rates caused by a badly designed system isn't going to solve anything.

Yes you are being unreasonable. Realistically you shouldn’t be entitled to any of those benefits. For you these savings mean being able to work one day less or going all inclusive on your next holiday instead of self-catering. Meanwhile the people who really need this type of support are facing decisions like whether they can afford to put the heating on vs filling the car with fuel. I’ll never have sympathy for people who feel like they’re hard done by because their benefits reduce when they’re earning a paltry £50k. If you want to avoid ‘disincentivising people from working hard’ then use their base salary as if they worked 1 FTE to determine eligibility for benefits, rather than their pro-rated salary. Get the funds to people that need it, not people who feel their owed it.

The really sad part about it all is that the groups of people this kind of issue causes strife between, being those on the poverty line and the middle class, are both being shafted by the government. We’re all being played against each other to distract us from the people this government (and most governments for that matter) is really set up to benefit, those who are already super rich. They’ll keep us distracted with these squabbles, while them and their pals keep getting richer. And we’ll play along and fight for the scraps they throw us. Hooray for us sheep.

Yes it's not like this salary is being handed out for free.

You don't think your idea about pro rata'ing all benefits up to the FT wage might cause a few problems for 'people who need it', then? Since there are certainly people on low incomes who make the calculations about whether more work is worth it. If you think people who are worrying about putting the heating on don't do this, you haven't met enough of them.

To say nothing of how you think this sort of byzantine system would be properly run and where the people are going to come from to do that, since one hopes you accept that there'd need to be exemptions for people who work part time whilst being carers or disabled. Or maybe you don't. In which case I suppose that simplifies things, but does mean you can't really make a needs based argument.

Honestly, the things people will come out with because of their attachment to a phenomenally badly designed, structurally sexist Cameron era benefits threshold is just bizarre.

Oh my gahd, all these posts saying they're paying £45-£65 a day! I'm paying £90 a day.

For what it’s worth there is also a huge gender pension gap that doesn’t get mentioned as often. Women tend to calculate current costs/income - salary, tax, NI, childcare and use that to decide whether worth it or not to work. Not taking in to account the impact of years of missed pension contributions especially at the stage of early-mid career where contributions end up worth much more means women are under calculating the benefits of working! Men on average have much larger
pensions despite women more likely to live longer!

Fortunately Sunak knows what a woman is, so has addressed this.

Hello, just to add a perspective for others who find themselves in this situation... even if your salary is over £60k you'll only have to pay back part of your child benefit. If you earn over £70k taxable earnings then in theory you'll have to pay it all back. However, as others have said you can often use salary sacrifice schemes if your employer offers them (e.g. salary sacrifice pension scheme) to reduce your taxable earnings, e.g. if you're on £70k and put 15% into a salary sacrifice scheme you'll keep all your child benefit as taxable earnings will show as under £60k plus you'll be sticking a good amount into your pension. Also even if you're lucky enough to be earning more than £70k, you can still have the child benefit, then just do a self assessment at the end of the calendar year for previous tax year (doesn't take long if you're employed and payed by BACS), you can also offset your tax bill with things including charity donations you made that tax year. Even if you have to pay it all back you can just get them to adjust your tax code the following tax year to pay it off if you do your self assessment by 31 Dec. So for tax year April 2022-March 2023 I did a tax return 31 Dec 2023 and will pay it back via tax over the tax year April 2024-March 2025. Might seem a hassle to some but my thinking is if I suddenly lose my job at least I've got the child benefit coming in and don't need to re-apply.

*should edit to say if lucky enough to earn over £80k (I hadn't realised that change in the budget from a £10k to a 20k window of having to partial pay it back)

Pay money into a private pension to reduce tax liability each year, tax man gives you extra 20% too.. get some advice look online ‘unbiased ‘ you get initial free advice. Saved me £15k in tax

Have you thought about taking some unpaid parental leave for a week or two which will bring you under the threshold and gives you time with baby for a break within the tax year?

Never thought of that one before!

ds is too old now for me to get parental leave, but wondering now if work would consider a short sabbatical as it wouldn’t be as expensive as I thought!

Your absolutely right.
People at the higher end of the scale are expected to contribute far more than their fair share.
Which leads to people making decisions like you are considering which overall reduces tax revenues.

In the interests of factual accuracy I would like to point out that the rich, like the Prime Minister pay a smaller proportion of their income in taxes than teachers and nurses do.

Why not have a voluntary tax code based on people who want to support foreign aid and immigrants or the other option for people that want to get the potholes mended.
Could be same rate but spent on different things.
Privatising road mending would probably work better than useless councils wasting millions on back-handers.

In the interests of even more factual accuracy, the rich like the Prime Minister, pay a higher proprtion of their earned / PAYE income in tax than teachers and nurses because they will be in the 45% bracket, so their blended income tax/NI rate will be higher than someone in the basic or higher rate brackets

The rich also pay a higher proportion of their unearned income in taxes than the lower paid, because the lower paid don't derrive as much income
from these and the reliefs available cover a much higher part of the gain than for someone making large gains. Take capital gains. Because the Capital Gains Tax allowance (£6k) is a drop in the ocean for someone with £100s of £000s of capital gains, but a material amount for someone with £10k or £12k of gains, the effective rate paid by the rich is higher.

Likewise on dividend income, those in the lower tax brackets benefit - currently they just pay 8.75% on dividend income while the rich pay 39.35%

But, unearned income is taxed at a lower level than earned income to reflect the risk involved in investing in assets that might not always make a profit

And in order to ensure that businesses can continue, to employ people, to pay taxes, to generate wealth, the transfer of such assets is often not subject to tax on death - BPR, APR etc make this so. Entrepeneurs relief means that those that do take a risk and set up a business that is succesful, generally employing people, paying taxes, NI, rates etc on the way, might only be subject to 10% tax on the eventual sale.

So, to be factually accurate, the blended rate of tax that the rich pay is lower than the blended rate of tax that teachers and nurses pay, because earned income is taxed more highly than unearned income.

If one is happy take more risk and be rewarded with a lower tax rate then one can start ones own business and invest ones own money ;)

I'm not sure how paying little tax on income you haven't earned makes things better?
Surely it would be more logical to tax unearned income higher than earned income?