Middle earners punished

[Eucalyptus321]

I am feeling so disheartened and frustrated by how middle earners are constantly suffering at the hands of ridiculous government priorities. My husband and I have a greater household income than other families we know but have less cash in hand due to increased taxes coupled with the fact we receive zero benefits like child benefit or tax free childcare etc. ZERO. If they want middle earners to fund the country thought tax then at least support us with childcare costs. It’s a joke that two parents earning £99k each get childcare funding but parents with one £101k salary and one £25k salary receive nothing. I just need to speak to people who understand the burden of raising a family amidst the current financial climate and then the potential of further tax rises!

Which is precisely why he wasn’t voted in and it will be the reason why this government won’t be voted in for a second term.

I just reread your post. It still says it’s not fair that you’re not entitled to benefits. If I read it again will it say something else?

Back then DH was on £100k. Now he's on £130k. DH was so upset about this because he works so so hard and the labour party just want to take take take.

The whole point is for the higher earner to receive benefits, i.e. subsidised hours. The other person is choosing to work but not so many hours because it affects her income, same as the higher earner. When the children go to school both can increase their earning power. It is hypocritical to judge the other lower earner and not the higher one.

Try being single and childfree if you want to feel like the cash cow.

On £120k it’s ~ £6.4K a month take home before considering pension & Student loan. Assuming you put 10% into a pension and have a student loan (feasible if you reach a high salary when younger) ~ £5.37k

In contrast if you have 2 adults on around £60k each then they would get ~£7.56k and ~£6.6k if paying student loan/10% pension contribution. Also they’d get access to free childcare hours for nursery age kids, tax free childcare and child benefit.

Even ignoring nursery if you have 2 kids just child benefit gives you another £185 a month and if they are in wraparound care you could easily save £1-2k a year on that with tax free childcare and a few hundred more on holiday clubs. It would be a fairly conservative estimate that you could end up £400 or so a month better off there.

I think the current set up is stupid and should be changed. I never understand though why people don’t use the tax breaks available to them. We kept ourselves below £50k each in past years by a mix of taking unpaid leave for holiday childcare and extra pension contributions & we will do same over next few years to stay below £60k. Taking unpaid childcare leave in particular feels like a no brainer. By the time you account for not needing childcare for extra weeks in the summer it doesn’t even make much difference to your income

I have loads of friends working part time because of tax implications. It is a net loss to the UK economy. Same with those that pile into pension, though at least there is a longer term benefit even if it curbs productivity today.

my job is effectively bringing business (professional services) into my uk based business. If I work part time the uk loses tax on the salary I have foregone, as well as tax on the income I would have brought in.

from my perspective, I earn a reasonable amount part time and why would I work harder for half as much incremental income? Under productivity is a massive issue for the uk economy

high earners working less isn’t just a lifestyle choice for them, it has implications for the broader economy.

You cannot have had only two children and had over a decade of nursery fees. The older one has to have been school age before the younger would have started. And even assuming both are September births so we're below school age for 5 years, and you took zero maternity, unless you chose to use a private preschool (also a personal choice) it should not have cost as much as full time day nursery. This was my situation, so it is one I am very familiar with. Two kids and no overlap at nursery, still not over a decade of nursery fees. And two kids in nursery at once costs as much, but more concentrated, so arguably much tougher for those with smaller age gaps.

Such entitlement.

Apologies if someone has done this calculation to demonstrate already

Someone earning 99k will take home around 68k after tax plus be entitled to childcare assuming partner also earns below 99k
Because of the loss of personal allowance after 100k earnings 100-125k are taxed at 60% so take home of someone earning 125k is around 78k with no support with childcare- potentially 2k per month difference meaning despite earning 25k more they are worse off by 14k per year than someone earning just below the 100k threshold.

The system is broken and doctors are dropping to 4 days per week as they are much better off working less. It can’t be good for the economy or society.

And yes I know some people are worse off but it doesn’t make this a sensible policy

Are you absolutely sure?! 🤔

@Eucalyptus321

This may come as a surprise to you, but after experiencing both, I can tell you that is is preferable to have some money, and pay some tax.

Than not.

I am sure there are plenty of low earners, paying little or no tax, who would be delighted to have your problem.

It should be no surprise that the people with more money are expected to pay more tax. That's the way it's supposed to work.

Labour are systematically removing all the incentives to ‘work hard’, especially if one of the objectives for an individual to ‘work hard’ is to provide financial security for themselves / their own family.

If all the personal financial incentives are removed and people ‘ with middle incomes’ are taxed and taxed again (think income tax, pension changes, loss of childcare support etc) do people really think that middle income earning people, especially those with young families, will just continue to work full time in stressful jobs to support others?

They won’t.

@Pandersmum

Lots of low paid people work hard, and long hours, in unpleasant conditions, and often with no job security.

It is a foolish mistake to assume that working hard, and having lots of money, go together.

I apologise and I agree with you. There are many jobs where you have to work hard for low pay. I did not mean to offend.

The reality is though there will be financial support for the lower paid via UC.

All the stupid tax and benefit margins should be removed as they create traps and non productive behavior. Work does not always pay.

• Remove the one where UC rate of withdrawal makes extra work not worth it.
• Remove the one at 60k where child benefit is withdrawn
• Remove the one at 100k where free childcare and personal allowance is lost
• And also simplify the stupidly over complex NI system by merging it into income tax.

Instead there should be a simple rate of tax with the principal that you don't pay until you don't need any benefits. Benefits should then be a safety net that provides housing , food or other services but not cash to those in the most need.

This will save a whole heap on HMRC and DWP, who lets face it struggle to apply the rules anyhow, and also close a bunch of loopholes. The only people who would be sad are tax accountants.

Idk if you're right - my partner earns £35k and I earn £21k. We do get 30 hours free childcare for the little one, but today had the harrowing experience of not knowing whether I could get to the petrol station before I ran out of fuel (today was payday). Over the last few years, we've had to literally copper up to get food, or on the rare occasion shoplift a couple of essentials to get to the end of the week. Delayed getting medication as couldn't afford it when it first ran out. Obviously no holidays, new clothes or anything. Honestly, I've been quite shocked by the whole experience. Genuinely curious whether you've experienced anything similar? Obviously your standard of living, is below where you expect it to be, and may well be below what it would have been 10 years ago, doing the same job. But I'm not sure whether people on a lower income than you have it easier. I think it's just got worse for everyone, but you're still closer to the top of the pile. I could be wrong though, I don't know many people on your income so have no experience.

Welcome to Brexit Britain.

Really?

Up until last year, DH and I were both middle earners (£40-50k each), living in the SE, mortgage, school fees, plus wrap-around care for the youngest and managing fine. Not living a life of luxury, but fine.

Our children were mostly before the 30 hours, so we've always had to pay full whack. I think we got the 3yo funding for the youngest, but that's it.

If you're earning at least £120k and struggling, you're doing something wrong.

Hyperbole.

Just looking at the comments above, maybe it's because we started off on low salaries so learnt to live within our means. I've been there, going round Aldi with a calculator on my phone to make £25 do a week's shop, only putting £5 petrol in etc. Bar the mortgage and school fees, our day to day spending is still pretty frugal.

Thank you for agreeing. I am watching it happen in front of my eyes. Giving these parents more money isn't helping lift children out of poverty.
I don't want to offend anyone who struggles and is doing their best, but not everyone is actually spending the money on their kids. No amount of money will change parental neglect or bad decision making.
Money alone doesn't lift people out of poverty.

Not where I am….most young people buy in their 20s and mortgage done in their 40s ( mine was paid off at 47 which is pretty average round here….I’m 60 now)….both my elder DC are on track to do the same…..so that’s a good many years to enjoy free housing…..then of course there’s the option to downsize…..I did this at 51 and handed up with around 80k after I had renovated and decorated my smaller home…..most of my friends have done the same…..so defo not a mugs game to own…..I’m NW though…so that’s makes a difference.……..I thought I was a middle earner ( 50k pro rata) ….but obviously not !

We got no child benefit due to my salary being over £55k and my DH was SAHP. Imagine how bad that was and there was no free nursery either!

But YANBU. We need to stop thinking anyone earning £100k is rich. They are far from it.

The Tories held wages down, sucked every penny they could from services and caused the UK to bea second world country.

Labour are now trying to straighten the books but it'll take decades. They have few options - services are so badly cut they need more investment. To grow the economy business needs investment. There is a COLC, food crisis, flood crisis, health crisis and we have an increasingly larger aging population. There are only a few ways to fund all these needs and taxation is one of them.

The millionaires get away with paying 25% tax or less if they're on a shifty, so government should tax them.

But I promise you, @Eucalyptus321 you are not the only one who feels fleeced. The self employed are facing the biggest onslaught ever. No job security. No sick pay. No maternity pay. Taxation now often means that I earn less than someone employed on £30k less than me and employees get a pension contribution! And it gets worse because from my taxed income, I'll need to find £2500 pcm to keep my Ltd Co going. Add to this that it's likely I won't be able to make pension payments into the pension I have set up because that would be salary sacrifice. And I have had an enforced 6 weeks with no pay whilst I'm onboarding too...

Why am I self employed? Because my age means noone will look at me for a permanent role.