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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To be shocked at the difference in take-home pay between £30k and £90k

626 replies

PAYE · 01/07/2024 12:21

So many times on MN, we hear people telling high earners to stop complaining. It appears that people think that someone on 90k has three times as much money as someone on £30k. However, progressive taxation and the benefits system means that there is surprisingly little difference in take-home pay between 'low' and 'high' salaries.

I used the Listentotaxman and EntitledTo websites to look at the difference in net pay and benefits at every salary level from £25k to £130k. I assumed a single earner with two kids, £1.5k in rent and £1.5k in childcare costs, a student loan and 5% autoenrollment pension contributions.

The light blue bars are for monthly post-tax income from Listentotaxman.com. This assumes no benefits and shows take-home pay rising with income.

The dark blue show post-tax income after benefits. The benefits are taken from Entitledto and added to the post-tax income.

This shows that

  1. If you have kids and pay rent, there is little difference in take-home pay regardless of the actual salary
  2. The net monthly income for someone on £25k in London with 2 kids, is the same as for a £90k salary without benefits.
  3. For the person in my assumption, their post-tax and benefit income would be just 15% higher at £90k than at £30k
  4. Monthly income is very flat at all income levels, however, someone earning £30k on universal credit is allowed to complain, but someone on £80k is told to shut up, even if their take-home pay is lower.

The reason take-home pay is so flat is due to:

  1. tax-credits/universal credit topping up salaries
  2. Housing allowance paid to private landlords
  3. child benefit being removed at £60-80k
  4. Childcare support removed at £100k
  5. Removal of personal allowance from £100-120k.

While no one wants children in poverty, what is the incentive to work harder if take-home pay is the same? Why increase working hours, go for that promotion or take that extra qualification?

AIBU to be shocked at the difference?

To be shocked at the difference in take-home pay between £30k and £90k
OP posts:
BurntBroccoli · 01/07/2024 21:03

Disneyiscool · 01/07/2024 12:57

The tax burdon is too high

House prices and childcare costs are too high.
High house prices due to lack of social housing. Childcare costs due to too many private nurseries and lack of spaces.

Tbry24 · 01/07/2024 21:26

Not going to bother with the details as sums up our lives. We are a couple, no young children and got our first home and mortgage 5 years ago.

We are currently just below the lowest rate for the higher tax bracket (thankfully) with one salary as currently I am unable to work. Before when I was also working DP was on a little less so we’ve probably averaged approx £35k-£45k for about ten years now.

Sadly we know from a whole pile of my friends with kids that we are financially the poorest by a long way as we have never claimed any benefits during our relationship (20years). I scrimp and go without to get all our bills paid.

So we have nothing to look forward to, no treats, no holidays, no anything. Just work, pay the mortgage and the bills and repeat. I see all the SM updates about the fancy holidays abroad, caravans and campers (owned) used most weekends in between, luxurious home extensions and so on and so on.

Mumteedum · 01/07/2024 21:37

CaptainCarrotsBigSword · 01/07/2024 12:59

Yes, there was a poster who was on £64k of benefits. She had two disabled dc and was a single parent, which obviously I wouldn't wish on anyone, but I'll not earn that ever. It was an eye opener.

And if that woman was not there to look after those disabled children, how much would it cost the state to care for them?

Anyone who is a single parent in that situation truly earns whatever we can give from the state to support them.

Lennon80 · 01/07/2024 21:43

Singlemumtoadog · 01/07/2024 12:41

I am generally as economically liberal as they come, but even I am frustrated at how little an increase in salary makes to my take home pay.
Because of the loss of personal allowance between £100k and £125k, any additional income I have received over £100k is taxed at 40% , reduces personal allowance and THEN 9% student loan deductions. So I probably see about 30% of any bonus in my take home pay.

What job have you got so early in after graduating that you are still paying a student loan?

Jellycatspyjamas · 01/07/2024 21:57

Childcare should be heavily subsidised or free for ALL parents.

Why should it be? Costs associated with children need to be considered when planning a family, I very much doubt that someone earning £100k plus doesn’t have the wit to understand the costs associated with having those children. We’re talking about the top 5% of earners here who will benefit from that high salary before and after childcare paying years, why should they be subsidised.

It’s a different situation to someone having a child with disabilities that needs a parent available most of the time (continuing through school years), or someone with low earning potential doing often essential jobs. Folk who can’t bear to see someone getting something they aren’t.

Im in Scotland, my tax burden is higher than most as a result. I cover my own costs, if it keeps children out of poverty I’m ok with that bit subsidising someone bringing in £5/6k a month, not so much.

Jellycatspyjamas · 01/07/2024 21:59

And if that woman was not there to look after those disabled children, how much would it cost the state to care for them?

Residential childcare for one disabled child is easily £8K/month.

Franzkafkascat · 01/07/2024 22:14

whistleblower99 · 01/07/2024 16:42

Net contributors are now a minority. The majority now take more than they contribute. This is part of the reason. That’s a bloated state.

Yeah Pensioners. Most people on benefits work. Pensioners don’t. Solution would be to pay folk more but no, can’t have that, bad for inflation, meanwhile CEOs and MPs are awarding themselves huge pay rises.

movingonsaturday · 01/07/2024 22:58

Bcdfghjk · 01/07/2024 12:39

I can't see this being correct. I earn a salary somewhere in the middle of that and don't get any benefits so not sure what these so called benefits are that we are supposedly meant to be claiming? Questioning the validity of this...

Child benefit, tax free childcare, funded nursery hours, hmm I'm sure there's more

movingonsaturday · 01/07/2024 23:00

MintsPi · 01/07/2024 12:42

Household income here of 30k after tax. We get child benefit for one child and nothing else. Not everyone on low wages gets high top ups.

Don't you get help with their childcare, child benefit etc?

Springwatch123 · 01/07/2024 23:19

palaminodusk · 01/07/2024 17:39

I earned 1900 a month in my job. I got topped up £1200 by UC.

So essentially UC paid my rent.

I was not complaining
Maybe everyone have a look and you might find you are also entitled to a boost!

Which is equivalent to a salary of around £50000?

MintsPi · 02/07/2024 00:13

movingonsaturday · 01/07/2024 23:00

Don't you get help with their childcare, child benefit etc?

Never used the hours. We would have been entitled though.

rubyroola · 02/07/2024 00:18

This is soul destroying

whistleblower99 · 02/07/2024 06:47

Jellycatspyjamas · 01/07/2024 21:57

Childcare should be heavily subsidised or free for ALL parents.

Why should it be? Costs associated with children need to be considered when planning a family, I very much doubt that someone earning £100k plus doesn’t have the wit to understand the costs associated with having those children. We’re talking about the top 5% of earners here who will benefit from that high salary before and after childcare paying years, why should they be subsidised.

It’s a different situation to someone having a child with disabilities that needs a parent available most of the time (continuing through school years), or someone with low earning potential doing often essential jobs. Folk who can’t bear to see someone getting something they aren’t.

Im in Scotland, my tax burden is higher than most as a result. I cover my own costs, if it keeps children out of poverty I’m ok with that bit subsidising someone bringing in £5/6k a month, not so much.

It’s these attitudes which mean we will never be prosper or progressive like the Scandi countries often looked up as a positive here.

The huge majority pay tax, the huge majority work. High earners here already pay comparable tax - it’s everyone else that doesn’t.

Guess what? Childcare is universal. That’s because they know it benefits everyone and the higher earners who do subsidise everyone else need a buy in. Anything which stops the big tax payers working and paying more tax is damaging to the people who need that money for the state services. Hence why stuff like that is universal. Everyone has a buy in, the majority work and the state is much better for it,

It’s the closed minded hatred of anyone who is a higher earner in this country which explains the shit hole that it is.

One thing you’re not doing is subsidising people on 6 figures - quite the opposite.

PAYE · 02/07/2024 07:27

It is specifically ‘high-earning’ families who are hated. Any suggestion of means-testing a single pensioner benefit - e.g. cold weather payment - is met with howls of ageism but it is fine to target families.

OP posts:
EinekleineKatze · 02/07/2024 07:33

PAYE · 02/07/2024 07:27

It is specifically ‘high-earning’ families who are hated. Any suggestion of means-testing a single pensioner benefit - e.g. cold weather payment - is met with howls of ageism but it is fine to target families.

It's high earners who suggest things like they might 'be better off on benefits', or high earners who say: 'I feel poor', or high earners who 'work hard' while forgetting many lower earners also do that, and so on. It's not high earners per se.

Menora · 02/07/2024 07:33

I was a single parent renting with a low salary on UC, and now I am a renter with adult children who earns a higher salary with no UC and there is pretty much only a couple of hundred pounds take home pay difference. I saw a huge income drop once the UC stopped and I went and got a better job with more income however everything else rose in costs anyway during this time, so I am only marginally better off. It’s hard to feel or see the difference and I don’t own my own home so have no assets, which at least I would if I had a mortgage

Abitorangelooking · 02/07/2024 07:46

I wouldn’t disagree. I take home about £3.5k a month, wages, Uc, child benefit, Scottish child payment. I work two jobs (saves NI), My salary is £36k. My ex earns £60k and also takes home £3.5k. We share custody but I pay for a lot of day to day stuff, after school club/ activities/ holiday childcare. He likes to book holidays etc.

I work for LA so little chance for serious progression but family friendly and flexible. I could possibly find something better paid in my previous sector (law) but it’d be longer hours, long commute, childcare difficulties and I’d not actually be better off at least while kids are in education and I can get benefits.

Sharptonguedwoman · 02/07/2024 07:51

whistleblower99 · 01/07/2024 12:27

This is true but people can’t admit it and they don’t understand the economical mess caused by the bloated and entitled state.

Explain, please?

Hydrangerous · 02/07/2024 07:59

PAYE · 02/07/2024 07:27

It is specifically ‘high-earning’ families who are hated. Any suggestion of means-testing a single pensioner benefit - e.g. cold weather payment - is met with howls of ageism but it is fine to target families.

I agree - I think no one quite believes that pensioners can be wealthy. Last week when they talked about the increase in the number of pensioners paying tax - they weren't talking about the positive rise in their incomes leading to them paying tax.
Anyway - thanks for the thread - the tax system is a mess and I'm sure we can all agree on that, very tricky to design a policy that doesn't end up with unintentional winners and losers. The system is too complicated.
I think the state does need to provide better in-work benefits, I think statutory sick pay is a crime but realistically you can't expect small businesses to carry the risk of paying higher amounts for longer - we need a Government scheme to insure people for sickness benefits delivering a proper rate, as businesses we already pay NI contributions for our employees - increase employer NI and deliver a good level of sickness benefit for all.
I agree that cut-offs distort incentives - better to give benefits like childcare and child benefit to all, then tax the higher earners more. Not going to be a popular policy I suspect.

RedToothBrush · 02/07/2024 08:04

We either value child care and those who provide it or we don't.

You don't say 'oh well you can afford it therefore you shouldn't be eligible for it to be free'.

Why? Because it still leaves a number of women up shit creek and it devalues their caring roles in society. It makes it harder for them day to day just because of petty spite and a lack of understanding of the implications.

It's not like they won't pay for this childcare. Taxes would have to rise to facilitate it. And the burden would fall on higher tax tax payers. But it would be shared across society and the role of women in our society actually valued and understood. It provides options though.

We need children. Society needs children. We have a demographic problem with a low birth rate which is creating future issues. We should value children.

As I said previously it also put some women in a vulnerable position where, if they are only minimum wage earners, it means some families have to pay to work because of childcare costs. This is ridiculous. Think of what is lost to society through this issue. Theres a whole group who become invisible to society and devalued. They may ultimately choose to stay at home but that should be a choice. It puts them in a position of being at risk from domestic violence and makes it harder to leave and it more difficult to rejoin the workforce at a later stage. This isn't in the interests of the country.

If they are an earner, it still puts them in a difficult position because of the greater pressure to provide and to juggle. As stated previously taken home pay for a single high earner can be much less than you think. Long term couples will be better off but in the initial stages it can leave you more financially vulnerable than people give credit for.

I live in an affluent area, and there is this hidden poverty issue that isn't often acknowledged. In recent years there's been a lot of families who have found themselves struggling even though on paper they are well off. The cost of living crisis has had an effect where if you budgeted 5 years ago for housing and bills fairly conservatively, you could still get caught out by interest rate rises, rent rises utility bills going through the roof and additional taxes. Particularly if your credit rating isn't as good as it could be. Families on middle income and good jobs have become unstuck due to being unable to move and reduce costs quickly (if you are renting, then finding a smaller property for less is a challenge if you are mortgaged there's equity issues and the speed of finding a buyer to cover your costs - and vitally you often need cash to move even if you are downsizing). Families on higher incomes are less vulnerable to this effect but they aren't immune either. My point here is also that reducing your costs is only possible if both people in a couple are onboard too...

Again domestic abuse can be an issue due to the risk of financial abuse and the woman finding herself paying childcare either in part or in full thus making it more difficult to save if she wishes to leave at some point in the future. Yes she could claim in a divorce and ultimately being reasonably well off, but this adds an extra barrier to getting to that stage in the first place. It's the interim period that's deeply problematic. A partner who refuses a divorce can make it exceptionally hard in these situations. It's one reason no fault divorces have been legalised but this is only one part of the picture. Even if it doesn't go that far there's cases on MN regularly where a woman doesn't have access to her partners funds, the house isn't in her name and she's told she has to pay childcare if she wants to work because their partner wants to control them. It isolates women if they are in a situation where they aren't allowed by partners to work. And it's harder for women to argue their corner if financially it is going to put you worse off if you do work.

This is about imbalances of power within relationships and how having children adds to that.

There is this sense that women who are better off do not need protection or are undeserving. The concept of them being better off is blind to the realities of financial and emotional abuse. It is blind to who has access to funds and controls them. It makes it harder to access support if you do leave because on paper you have assets because of means testing, which is fuck all good if you can't access it and you face a battle with an abusive partner who blocks it.

Basically it affects women's ability to be independent because child care is seen as a luxury expense which parents should be solely responsible for rather than society valuing child care and children as important to the future of the country and it's development and how it reduces the risk to a group of women who often get overlooked because they are regarded as privileged with no concept of how they might also be much more vulnerable than many realise. There is this sense that domestic abuse isn't something that happens to middle class women.

Free childcare for all reduces many of these risks and as I say the financial burden would still fall on those on the highest incomes. The main difference is spreading the cost so the impact of having children isn't so profound as a jump and because it reduces the risk of financial abuse.

The 'how' of who pays for childcare actually matters.

PAYE · 02/07/2024 08:12

@RedToothBrush Agree - but the reality which I have tried to show is that ‘high PAYE earners’ are very highly taxed, particularly if they have children.

What is lightly taxed is wealth, both in absolute terms and income from wealth. Being rich means having wealth (i.e. savings, assets). A high income without wealth and you are vulnerable to being made redundant and losing everything.

Again, young families are not ‘wealthy’ but are repeatedly targeted to pay more, but those with millions in assets and income from capital gains face low tax. That is why Sunak’s tax rate on his income is less than 25%.

OP posts:
RedToothBrush · 02/07/2024 08:16

PAYE · 02/07/2024 08:12

@RedToothBrush Agree - but the reality which I have tried to show is that ‘high PAYE earners’ are very highly taxed, particularly if they have children.

What is lightly taxed is wealth, both in absolute terms and income from wealth. Being rich means having wealth (i.e. savings, assets). A high income without wealth and you are vulnerable to being made redundant and losing everything.

Again, young families are not ‘wealthy’ but are repeatedly targeted to pay more, but those with millions in assets and income from capital gains face low tax. That is why Sunak’s tax rate on his income is less than 25%.

Agree.

There's a big difference between those who earn enough to hire an accountant to reduce tax burden and those who are on salary too.

If you can call yourself self employed or have incomes from multiple sources, you can reduce your tax liability massively. I think this is what needs to be tightened up on tbh.

So two people with an overall income of say £150,000 may not be paying anywhere near the same amount of tax as a result of this. I find this mindbogglingly just flat wrong.

swimsong · 02/07/2024 08:24

Charlie2121 · 02/07/2024 07:45

https://taxpolicy.org.uk/2024/03/17/tax_and_nhs_spending/

This is an interesting article showing that it is indeed lower and mid range earners that don’t pay enough tax.

That's not what the survey is showing.

AllstopAllrr · 02/07/2024 08:37

I'm in Scotland. Student loan repayment plus the eye watering higher income tax means I've got no incentive to go for my next grade promotion.

Huge extra stress and responsibility for barely any net income increase.

That point where child benefit gets removed, the £100k tax cliff + Scottish tax increases= I'll only ever go down to 60% work contract or maybe 80%.

Just like ally senior colleagues.

No one pays more tax, we just go slightly less than full time. And/or ramp up pension contributions.

Leading to £0 extra tax revenue and the supposed "productivity" and "talent gaps".

There's no gap. Senior colleagues just aren't idiots.

The government has DESIGNED things this way.

Did they really think higher earning people would just act like robots without any common sense?!