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!

Thank you, I think this is a fair point and one I will mull over. I do see that I’m being short sighted when it comes to my long term career prospects.

Rotten isn't it OP. I'm in the same category as a single mum and I see 36p in each incremental pound I earn.

Overall I pay a higher percentage than Rishi Sunak. I don't see how that can be fair.

A lot of doctors I know also fall into this. I have 3x children, main earner in the household and can earn under or over £50k/annum depending on my LTFT% and any overtime. If I drop an extra day at work/week to go below £50k then I save a day of childcare fees for x2 preschoolers, I retain all of my child benefit x3 children, pay less tax / NI etc and I get more of a break from my often difficult and exhausting job to be present for my family. My progression / overall career trajectory is barely affected - nearly everyone works LTFT in my job and they can't get enough people to fill the posts. I like my job and I'm needed in my job - but I'm not a martyr. It'd be one thing to do the extra work and get a nice family holiday or a better lifestyle out of it, why would I put extra strain on myself and my family for next to no benefit?

You'll get your arse handed to you but I completely agree with you. We are great at disincentivising high earners (ie high tax contributors) in this country.

Student loan repayments or graduate tax as I like to call it is a killer. Introducing student loans and tuition fees instead of funding from general taxation was a disaster and will remain a disaster.

childcare is at least temporary- as soon as the kids get to school, you’ll feel the financial benefit as costs drop dramatically.

I earn a similar salary but no longer have childcare and don’t pay student loans anymore. I work in finance and was asked to work out a colleagues post tax pay. They were on about £60k more than me per year gross but because of the student loan repayments, their take home pay wasn’t much more than mine. I was shocked!!!

Thank you for considering it. It isn’t fair, it is sexism baked in to the workplace, but it’s the reality we mothers face. Maybe it will be different for our daughters.

DD earns £54k but is a Teacher and her 10% pension payments get her under the 40% tax limit.
Her partner earns similar but didn’t have a pension so had to pay around £300 CB back but they still kept almost a grand of it so it doesn’t seem too bad.
He’s finally signed up to his work pension after getting a £12k bonus!

I do think it’s wrong that Student loans or child support don’t get taken into account for higher rate tax.

Of course it is you are still 3K better off in cash, paying more into your pension (and could pay more to lower tax) and are paying off more of your student loan off.

However if time is worth more to you then this and imo it is, lower your hours to fit within the 50k threshold.

Ultimately it is a good problem to have

Try being in Scotland, it's 43k.
Oh well, we're going to have good pensions.

OP, you are not being unreasonable and just ignore all of the snarky comments on this post or the discussions around what is fair or not fair. I think you have already done this, but pay more into your pension to bring you to £50k. For anyone else watching, you can do this on a one-off basis by phoning your pension scheme, even at a late stage in March to catch this year's tax cut off date for 23/24- you do not have to have to make a special arrangement to pay more into your pension each month via your employer (although you might have to fill in a tax return to ensure you get the money back). I am saying this because people think it is "too late" if they have taken their pension options with work, and generally, it is not. For two children, the direct benefit would be £2074. Next year 2024/5 it will be £2212.60 *and another £881 for subsequent children. I realise it is a sliding scale between 50-60k, and I also realise that not everyone has money spare to suddenly pay a lump sum into their pension, but at least then the money is in your scheme rather than in the hands of the taxman. When you finally take it, you also get 25% tax free, so in the above examples, you are also getting £500ish of it back (albeit eventually !) per year of you doing it. This happened to me quite late on in my career a few years off retirement, but still having 2 children at home, and I paid quite a bit in to achieve this exact aim. Although I said I would not say what is fair and not fair, my husband earned nothing in this period, so the only income was mine, and that is where the rule caught us out. There are, of course, rules about how much you can pay into your pension per year and the lifetime allowance, but that is a different topic. I hope this helps xx

Funding your own pension is not dodging tax, ffs!!

And I can totally see why OP is upset .

Bet you haven't thought about how much tax OP puts into the system that will benefit you and your family - and everyone else who earns less than she does 🙄🙄

You only have to pay childcare for a few years, you're not on the breadline and I'm sure you'll be just fine OP.

I read an article in the guardian about how the more money people earn, the better they sleep. Not just because of worrying about finances but also because people on lower wages tend to work way more hours.
So stop whinging on

Poor people work hard too

Also an unhelpful post. Neither the OP nor this poster make the system the way that it is so there’s no point sniping at each other about it. It’s the government who enable this mess.

But... what do you do? What qualifications do you have? Why not apply for a better paid job?

Well high earners do pay very high marginal taxes ( 40-70%). They could also have very high costs ( childcare / mortgages etc)

The actual asset owning wealthy ( like Sunak) , do not....so Sunak would pay a lower proportional.rate than teachers and nurses, but someone on £78k or £110k would not.

The 50-150k earners typically get the 'kicking', neatly disguising the fact the quality of life is dropping/ cost of living going up for everyone, except the asset owning class. The Trading Game by Gary Stevenson is an excellent book on this ( wider than taxes)

Sunak is a high earner and pays 23% tax rate on his income...

Poor people work hard to

Yes they do, but the benefits they receive are paid for by the higher earners.

I work 35 hours and paid £28,000

DF on benefits works 16 hours a week and gets £3,000 a month so £36,000 in her pocket every year.

Fair? I don’t think so - especially as her three kids get free music lessons, free school meals, extra tuition, trips for nothing -

Dont talk about fair - it’s isn’t

But... what do you do? What qualifications do you have? Why not apply for a better paid job?

Not everyone is given the same life opportunities, some people have issues with learning or caring responsibilities. They didn't go to good schools and have happy families that encouraged them.

It is indeed the same way people on the various benefits thresholds feel. That's the most important thing here. We have far too many of these bottlenecks and they all need addressing. Because people don't just feel in these situations, sometimes they decide its not worth the effort. But these are all manifestations of the same underlying problem.

No you are wrong pension can be deducted in working out high income child benefit charge

Indeed. There are many people working really hard and still getting minimum wage or a little more.

Hi Jeremy, are you using MN to test the waters prior to Wednesday's budget?😁

Reading some of these 'my heart bleeds' and 'I earn 12k' so count yourself lucky comments just show the woe is me attitude of some posters. Some people are dealt a crap hand/can't be bothered yet can't accept that others circumstances seem better than theirs.

OP, slam the increase into your pension and take the financial hit for the time being. Think of it as a savings account that the government are adding to. You'll be glad you've done it in years to come. Just flip your mindset around it to a positive.