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!

Jesus fucking Christ, way to miss the point of the post.

Yes I feel lucky to earn £49k. But also I have a high mortgage and lots of bills. And debt as a result of maternity and not being able to cover bills. So I dread earning a little bit more than £50k and losing access to things like child benefit which do help me out. It’s not unreasonable to observe that.

When 50k threshold came in, salaries were lower. More people earn over this now but there’s not much incentive to earn just a little over, you need a bit of a jump to make it financially worth while. That doesn’t mean that you’re not in a more privileged position than many though. Both can be true.

it's better than not having it at all because you used it to pay tax.

The tax that’s needed to educate her children?

It used to be, didn't it?

I've realised from this thread, actually, that I'm an idiot and I'm completely fucked for next year. I started a part time job because I didn't think I'd get a full time one, and ended up with an overlap. Because of how it's paid, it will all be paid in the next tax year. Feel like crying! I've worked my arse off this year and will end up significantly worse off. what even is the point.

The system makes no sense. Why is there such a random cut off point, and why is it SO harsh? There is no way that someone earning 50k is so much better off than someone on 48k, that it would make sense to charge them double the tax. How is someone on 50k comparable to someone on 110k. It would make way more sense to have it as 25% at 50k, 30% at 60k, 35% at 70k, and so on.

Just as I'm so done with "high earners are all sooo hardworking and contribute so much more to society than all you lazy, envious povvos..."

They don't necessarily work any harder, or earn those huge salaries : they just get paid more. Usually for pushing money around or pointless 'service industry' non-jobs.

I know people with fistfuls of educational and professional qualifications who work like dogs and will never pay higher rate tax. Rather be friends with them than with a "the only real success is loadsamoney" type, thanks.

That might work, if you were capable of doing their job.

I think people should keep in mind which party introduced the High Income Child Benefit Charge in the first place. ;)
I think people should pay their fair share of tax, but the thresholds shouldn’t act as a disincentive for working. If they do, there’s something seriously wrong with them and they need reformed.

My husband and I earn more than £50k combined, but I can still agree it isn’t fair that we can keep child benefit but a single earner on the same salary can’t. We already benefit from the two personal allowances anyway. Work isn’t really attractive for us either though, because childcare costs are so high (more than our mortgage).

Why? And who will pay for it?

The calculator I used said 55k on take home of 78k. If the extra is for pension and student loan that’s still money as you’re paying off debt quicker and earning a larger pension? If your partner is on minimum wage reducing 2 days will only cost them 4 or 5k.

Because when you factor in the high admin costs of the ridiculously complex system it’s probably cheaper to make it universal.

Child benefit aside, my dd1 (29, no kids yet, higher tax payer) got a 20% bonus last year. So much of it went in tax or student loan! This year her 9% bonus will likely go the same way. At least she gets bonuses - wisely, none of my children have chosen to follow me into teaching 😂

I think you should definitely keep working at your career hard and as much as possible irrespective of earnings.

You’re the main earner so it’s really important that your career progresses.

As other posters have said, sadly going part time indicates you don’t want to progress. And aren’t willing to work hard enough or at all. Your children aren’t going to care if you change their nappies a couple more times a day- frankly they won’t remember. They will care if you can afford to pay their uni and house deposit however. Plus you should advance your career for YOU.

The "cliff edge" of losing CB hurts. But once you are through it its worth it. longer term, earning more = student loan paid off sooner, more into pensions. I've also found that the 40% tax rate means pay jumps at senior levels tend to be bigger so that any pay rise accompanying a promotion is worth it in terms of pounds in your pocket.

Well why are you having a third child then. There is a simple solution to this - don't have kids you can't afford

I've also found that the 40% tax rate means pay jumps at senior levels tend to be bigger

Certainly true where I work. The last sub £100k pay band starts at around £80k and the next one starts at around £120k.

Excuse me? where have I said I can’t afford the three children I’ve planned for?! I can 100% afford them and that’s not my point of the thread….

True.

And it avoids ridiculous tax cliff edges arising due to means testing. It cuts out the complexities of claiming for NI credits and paying it back - I know some people get caught out by this.

It also makes higher rate tax payers feel like they are getting something back for all the taxes they pay which is no small thing because they feel valued as a part of society and not just taken for granted as a tax money tree.

It's fair enough that you start paying off your student loan.

I always think that paying that off should be tax deductable.

World's tiniest violin.

Love these sort of narrow minded responses. Why don't you try and get yourself through the same level of qualifications that takes you into the higher level of earning instead of sitting around being jealous of the success of other people?

Many people who are self-employed work full time for much less than the minimum wage. They are often forced to do this because they are disabled and may have been denied the benefits they are entitled to by the inherent dishonesty of the benefits system. Before I became too ill to work at all I often worked 16-23 hours a day, sometimes for weeks at a time for only around £700 a month because it was the only kind of work I could access. At my benefits hearing they quoted me as saying something I never said (basically reporting that my most disabling condition had miraculously cleared up which of course it hadn't) which lost me about 50% of the points I was supposed to receive. This is sadly a very common experience. So despite the fact that I excelled academically at school and university and have worked harder than almost anyone I know I have struggled to make £12,000 a year. Again, this isn't uncommon.

Don't work harder? Pointless jobs?

If they were so pointless then the salary wouldn't be paid. I'm 25 years into my career. You come and do my worthless job

The £2k plus I pay in income tax alone every month supports other people. I don't complain. I don't want a hand clap either. But at least don't slag us off. It's PAYE, we aren't hiding behind a ltd company.

And sorry, I should just point out that I wasn't the person who mentioned earning £12,000 initially. Just thought I'd explain my own situation so that people understand that you can be working full time and not earning anywhere near minimum wage.

I don’t think people understand what most people have to do to earn those wages. Studying while working and often also whilst raising a family (a few of those in my family, you literally have zero time to do anything else). Or being available way beyond contracted hours, going home doing dinner and bathtime and then opening up your laptop again to keep going.

There are some very able people who are paid very well because they have niche valuable skills and don’t have to work mad hours to achieve that but most on 60k plus aren’t getting it for free.

The cliff edge is truly horrible if you are putting the hours in and seeing little benefit for it.

There was a UK Treasury Select Committee House of Commons report mentioned in the times yesterday that said the cliff edge at 50k was having a negative economic impact on the UK and also the cliff edge at 100k is having a similar impact on economic growth, this was based on their interrogation of Bank of England economists.

It's clearly not popular to reduce taxes for those people impacted but might actually benefit the rest of the UK overall if the cliff edges were smoother out.