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!

@blueshoes

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

Can you explain what you mean? I have 4 years of not full years on my NI contributions (university) that I can buy back. I find all of this stupidly complicated so currently need to work out if that's worthwhile to do.

Past two years I have credits as I stopped working to look after my son. Do I have to pay something back here too?

We are now in a situation of my husband earning £60K and I'm trying to understand what we do about child benefit as well. Stopping it altogether seems simplest.

It's incredibly unfair that if one person earns nothing and the other earns £50K you are charged. But both people earn £49,999 you don't. What kind of nonsense is that?

But surely if you're on that sort of higher salary you'll be smart enough to work it all out? You may want the bonus money now - all of it without being taxed - but it doesn't work like that. This page is very useful But no doubt you know all this. Plus all the people coming on this thread to say how dreadful it is to earn more than £100k - don't you do all this as well?

https://taxscouts.com/high-earner-tax-returns/60-tax-what-to-do-if-you-just-started-earning-over-100000/#:~:text=Over%20this%2C%20you%20pay%20tax,over%20this%20%C2%A3100%2C000%20threshold.

Speaking for myself, thankfully my husband is good with this sort of thing. I earn well (when working- currently only just returned to work after having a child and will have to stop again for a while when we have a second) but my earning potential is shy of £50K when working full capacity.

We are both self employed. One person earning over £50K is a new development for us so we're only now having to look at these things.

I work with languages and have never been good at maths so I'm reading up on it all now- Mumsnet discussions about these sorts of things are invaluable to me and I come away with a better understanding than from researching on my own or reading useless .gov sites. Just because someone is skilled in a specific field and can earn well in their industry doesn't mean they are good with numbers. I think a lot of people can relate to that! I was the first in my family to go to university, the first to earn what I earn, the first to work as a sole trader and have to navigate all that entails. My parents don't have a clue.

Like I say, thankfully my husband is good with these sorts of things and we'll discuss it when he returns from working away. In the meantime I'm just trying to understand it all better myself so that we can chat when he's back.

Not a massively helpful article given it has the wrong threshold for taper in it.
Noone has said it’s terrible to earn a high salary.
It’s completely possible to both believe in progressive taxation and feel that the current system is poorly designed with cliff edges that have a punitive impact and act as a disincentive to career progression/ full time hours.

It's so sad and pathetic that the asset owning class have convinced hard working people to bicker and squabble over their relative incomes.

Doing more productive work should always pay. Right now, if you earn around £50k, it doesn't. It's irrelevant that you are luckier or more privileged than someone earning less, if work doesn't pay then people choose not to do it.

Noone benefits from this. People doing less productive work harms the economy. It reduces productivity, reduces cash circulation, and reduces the tax take.

The choice not to reward productive work is driven by the ideology of the asset owning class, who dominate our politics. That's the real class divide in our country.

A professional on £100k has more in common with a self employed cleaner on £12k than either has with the likes of Sunak or Rees-Mogg. And the likes of Sunak and Rees-Mogg prefer to keep it that way, forever. Which they can do, because as well as possessing dramatically more wealth than even the very best paid professionals not belonging to the asset owning class, they also have easy access to power and influence.

If you earn a pittance it is at least theoretically possible to earn more, or for your children to earn more by entering a well paid profession, trade or through good enterprise. It's still not fair that many hard working, valuable people have such low incomes and that social mobility between income stratifications is still so poor. But there is virtually zero social mobility that will allow you to enter the same world that Sunak occupies. It's not a position you can get to through merit or hard work - I'd go so far as to say many in the asset owning class demonstrably lack merit or a hard work ethic.

Oh and to all those heart bleeds people - the average full time salary is now about £39k.

So while £50k is obviously above that, it's not much above that. For our tax system to treat it as a "high" earner salary, where so much is taken away, is really crazy.

It's really just a bit above average, and as I said in an earlier post, if it had been increased in line with inflation, it would now be £67k.

DH earns no where near £50k so I do agree OP. We get a sizeable amount of UC, CB for four DC, and Scottish Child Payment for three of four DC. And I have my tuition fees paid for by SAAS to do a part time degree via the OU because I am not in paid employment.

@KidsDr Well said! We are definitely moving from an income- to an asset-based society. And as you say, no amount of hard work can get you from the income-reliant underclass to the asset-reliant upper class, unless you are exceptionally fortunate and successful eg found a very successful business and sell it; work in the upper echelons of finance...

Personally I'd just reduce my hours and become part time. You'll have more time with your child, and pay less tax.

Yup I know how you feel. I’ve had to pay a fair bit back. Posters saying their heart bleeds, well it’s annoying when you’ve worked really hard to get promotions etc and your extra money is eaten by the tax man etc. Frustrating for me too as I’m the only earner in my household as a single parent, whereas a couple earning just shy of 100k would receive the child benefit. I can’t even afford to buy a house in the South East so I’m far from well off. If I was you OP yes cut your hours or put some into your pension.

Back in the old days when only the poor suffered and middle earners thrived. I remember lots of judgy comments about poor people needing to get off benefits and should be getting a better paid job. Lower earners were judged for working the system to get maximum benefits/earnings. Even tho we were talking about them getting maybe 20k a year probably less.

Maybe the middle earners should stop claiming child benefit and get better paid jobs? Maybe the middle earners need to help themselves?

Look I am not complaining. I appreciate others earning really well so that I can study part time for as many years as I need to, with all the various benefits we are in receipt of helping too. Thank goodness for a welfare state when it's needed.

But that's your choice to work hard for years and you must have realised that you would have to help fund others with the taxes you need to pay.

No one forces you to earn a massive salary. It always has to come at a cost🤷🏻

@laclochette

Yes, the parasites are in charge!

Earning money through assets/investment literally contributes/produces nothing directly and in many cases may actually be actively destructive (eg certain extremely profitable fiscal activities have caused vast economic damage, investment in the fossil fuel industry is destroying the planet etc), and is also currently the least taxed way to earn money.

A two tier society of asset-owning Vs income reliant also heralds the return to a kind of feudalism which is especially dystopian in the context of overpopulation, environmental degradation, rising automation etc. What happens to the majority of people who rely on work, if/when the parasites no longer need them?

Democracy is the only thing standing in their way and how's that going?

But, we are very distracted by squabbling over who earns more, whether that's fair or who gets more benefits, whether that's fair etc

Don't hold back 😬

Finally the penny has dropped. I hadn't thought of that. Good point.

It’s not a massive salary, I can’t even buy a house and it’s the only income we have in my house as I’m a single parent. £1300 of its gone in rent every month. I wouldn’t mind if I was rolling in it and had loads spare every month. Two teens are expensive, especially one who is at Uni. Yes it’s my choice to want to work hard in a career. I’d assume that’s pretty normal for working people to want to do well and earn well. It’s frustrating when any small bonus you get is half gone by the time it reaches your pay.

@Yourethebeerthief my Dh is self employed, and since he has got an accountant to help with tax return etc it has proved a real game changer for him (in a good way) ie saved him a lot of money. HMRC change the rules/thresh holds virtually every year and it's reassuring to know an expert is looking at your finances. Don't know if that might be helpful for you?

@laclochette The average UK salary is £39k??
Wowzers - the NHS hospital I work for hasn't had the memo yet.

£33k a year for top band 5 after the strikes and pay rise. Yes I could aim for promotion for a higher band, but the NHS will still need workers to be Band 5 - and there's an awful lot of those posts - many of which cannot be filled.

It's over 50k of taxable pay. So for example if you earn £52k but have paid £5k in pension contributions for the year, your taxable pay would be £47k so you would keep all child benefit.

You wouldn't be complaining about the childcare fees. If you want three you have to suck that up.

@Vettrianofan It's generally accepted that marginal tax rates over 50% are bad because they are such disincentives. The UK system is full of people paying marginal tax rates of well over this including the OP. Yes higher earners should pay more, relatively, but a) in a country where the average full time salary is £39k, £50k is hardly a "massive salary", and b) paying more than 50p in every next pound you earn is not a sign of a well-organised tax system.

I get you're annoyed you lose so much but you're still getting 3k.

@leafybrew yes, about £38-39k for full time workers. The data is obviously always clearer in the rear view mirror, but this seems to be where we are now. This is the median average btw not the mean.

£38k now is equivalent to £31k in just 2020, adjusted for inflation. So without significant pay rises people really are much worse off. If you were earning £31k in 2020, you need to be earning £38k today just to have the same purchasing power.

That's why the £50k limit not shifting in line with inflation is so unfair (same with all tax bands, which are frozen until 2028).

And for every single mother, person with a disability or carer, there is someone who happily sits on their arse and does nothing to advance their careers.

Maybe some people value other things more than money. Nobody on their death bed said oo I wish I'd spent more time at work furthering my career

I don't have a great career, I took four years off with my kids when they were babies and they were the best years of my life. I work school hours now so I'm there for them to take to clubs be with them at home after school etc. we don't have loads of money or flashy cars and holidays but no stress and loads of happy memories together.