AIBU to feel disheartened by earning into the higher tax band?

[Chocolateapot]

I have finally after many many years of studying progressed in my career to just slightly above the 40% tax threshold. Unfortunately I’ve realised this now means any additional income I earn is now taxed at 40%, student loan 9% and 2% national insurance, essentially giving a marginal tax rate of 51%.

Not sure why I bothered tbh

Are/were there any plans to review the bands/caps? Haven't heard anything about this.

I do understand it's a bit disheartening, but paying higher tax is a privilege that many will never have. Try to look at yourself as being fortunate enough that your hard work has afforded you a substantial salary, there are many who will never experience that. I say this as someone close to the boundary for higher tax bracket.

Can't see many responses providing solutions to not feel disheartened, so thought I'd add my two pence...

1. If you get paid weekly, move it to monthly, I did some agency work that started weekly paid and asked them to move it to monthly, I was loosing a day a week feeling depressed about how much I'm paid instead of one a month. If I could get paid annually I would.
2. Try not to work pay day. Unfortunately probably not an option at £50k threshold, but at £100k where you are trying to cut days, use flexi, take more leave; taking the day off on pay day is great psychologically! You are busy with the kids / doing something nice, generally not thinking, here I am working for the government tax bin.
3. (Not financially astute and lucky to be able to do, I know) but have a months surplus in your account. e.g. if you get paid £3k, your current account balance should sit between £3k and £6k, not £3k and zero. Obviously having the £3k in savings getting interest is good etc but it feels more like the pay is bonus and available, instead of something to make ends meet.
4. Don't get all your expenditure to leave on the 1st of the month, spread it out, so all the earnings don't disappear straight away. Obviously you need to have surplus that you will not run out of money for essential costs / be disciplined.
5. Try not to spend on work related stuff. Someone else suggested changing jobs to reduce commute costs, 100% agree, but this is simpler. I refuse to buy expense work clothes, my go to work shoes are 10 years old. I regularly work away at my expense (office is 150 miles away) and when I do, I always try to spend as little as possible e.g. free coffee from machine instead of nicer cafe coffee, cheapest airbnb I can find, only buy discount food for dinner. Then go home and don't think about £30 cafe trips / days out for kids / staying in nice airbnb on holiday etc.
6. Celebrate payday! Do something nice / spend on payday. A true classic but something us trying-to-be-financially-sensible-people sometimes forget. Go for a drink / a meal / take the kids out, because you earned it and deserve to celebrate each month.
7. As many others have said, maybe not everyone but lots of us feel disheartened, you are not alone! Try to feel positive at this pay rise, you earned it, go for the next pay rise, the next £10k, you'll likely only look back and wonder how you survived on so little, because you will earn more in the future if you continue to strive to. Good luck.

I’ve recently received a 20% pay rise at work. Added to my bonus etc this is the first tax year I will earn over £100k. I’m pleased, I get extra money in my pocket each month, pay more tax in to the system rather than it being kept by our shareholders. The only pain is losing 20% on childcare costs but I’m just going to pay a bit more in to my pension instead. I feel like I am in a very privileged position. Outgoings are super low as well as I’ve tried to be sensible (small house, £550 mortgage, own my old banger of a car etc)

I don’t see this the same way as you OP. I never thought in my life I would ever earn this much. I’m going to get all my debt cleared, build my savings up further and then throw even more in to my pension. I do think those of us that earn more should pay more tax BUT I don’t necessarily agree with what the government spend it on.

And you can both have it once you have taken the years and years of education, training, experience, stress etc required to have gotten it and to maintain it. Or are you suggesting that most people just walk into ok paying work? Because I don’t think I know anyone who has.

Not benefits bashing, not moaning, just understanding why some people, because they aren’t much worse off by not working, choose that path. I have been extremely poor, when I was expecting DC2 and DH lost his job. We’d given up a lot to move away from family and friends, and living on ‘the dole’ in the early 70s in a horrible private rental with an outside lav was pretty brutal. There wasn’t even family allowance (child benefit) for the first child back then. It gave me the motivation to always work.

You’re assuming I didn’t do higher education. You’re assuming I haven’t done years and years of training at work including a job related degree. You’re also assuming I haven’t worked in the same field for (now) 38 years. I have. I’ve started at the bottom and worked my way up yet still do not get paid the same as OP or approaching it.
So yes I will swap and I won’t moan about the amount of tax that means I have to pay.
But hey you go on assuming I think that unskilled and inexperienced people waltz into senior positions.

Is the way of living better? More benefits, I live in the USA

Yes the irony is people claiming more in benefits that the OP earns completely tax free!

I absolutely feel for you. We are in a similar position. Although I have two student loan repayments. One for my undergraduate degree at 6% and one for my postgraduate degree at 9%. My husband and I have combined student loan contributions costing almost £900 a month which is like a second mortgage. Also my degrees have contributed to the development of services within healthcare but have all been self-funded. As I work for the NHS, I have high pension contributions too which I know I will benefit from later in life but with a young family, it's hard now. We are stuck in the debt cycle from being first generation to go to University. We both had no financial support from our families for University, getting on the property ladder and paying for our small wedding hit us then maternity leave was harder again. I work 4 jobs over 6-7 days a week to be able to afford to have the lifestyle I want for my children and have holidays but pay 40% tax on all additional earnings. Also lose tax free childcare as result. I don't mind contributing to society but it does feel like a kick in the teeth when we can't access healthcare services due to long waiting time so have often opted to pay private so we can remain in work.

All the food I buy is budget ranges and I cook from scratch most nights. Prepare for Christmas over the year, don't buy brands and purchase all items such as clothes in the sales etc. We do pack lunches when out for the day so I wouldn't say we are flash.

What irritates me the most is the general public perception of middle earners and how we should feel lucky. I've worked since I was 13 and sometimes it feels exhausting managing everything. I do think maybe life would be easier if I worked less but the experiences we are able to give our children is worth it and we've been able to travel to lots of countries, opportunities I didn't have as a child. What gets me through is that at some point in the future we will be very comfortable and be able to help our children get on the property ladder but it would be nicer if we had that income now so I could be more present at home.

Most of the squeezed middle don’t hugely benefit. Other than NHS and schools.

there are other things that work better than in the US for example managing homelessness and mental health and gun law child poverty. Also better paid time off, employment and food.

Earning just over the 40% tax is really disheartening. Especially when people on benefits who either work part time or not at all and “top up” with benefits seemingly have much higher disposable income.

NHS is shocking I can’t get an appointment at there are non after work or at the weekend. And then have to fight hand over first to fight beaurocratic treatment pathways ….

So in a country like India many people don‘t pay tax. This works out as this: It feels nice when you have a bit of money and need a doctor. There are loads to choose from because you are paying them directly. They‘ll give you any kind of medication you like; prescribe loads of anti-biotics when you don‘t need it. Because the doctors get paid. But my husband‘s family is middleclass, was always careful saving money etc until brother in law became ill with cancer. Now all the treatment is impossible to afford. The whole family is hundreds of thousand pounds in debt. They manage month to month but who is going to pay it back….

Also why do people think India is dirty? Because there is no waste collection. No-one collects it. You have to get rid of all your waste yourself. So people burn it. My husband’s family produce very little rubbish compared to any UK family, but what there is has to be burnt or thrown into a field. If people go litter picking, where do they put it? There’s no-one coming to collect it. So no-one picks it up. So our UK society really is not falling apart, we‘re just not the kings of the world anymore. Our raping and pillaging priviledge from invading and stealing from colonies is wearing off and we have to get used to not being top dog. You have to work hard in life and that‘s to get by. Working hard doesn’t automatically mean you deserve to live like a millionaire.

You've only just realised this???

They literally tell you when you apply.

Yup! And subsiding workers, although not a perfect system, keeps them in the workforce for a time when they can work more, role models for their kids, keeps skills relevant etc etc

Absolute bullshit. No one is trying to rob money from people with severe learning disabilities. The system was created to support those exact people. But our benefits bill is like a many-headed monster that just keeps growing. People will happily pay taxes as long as the social contract is upheld. What's happening now is that the middle earners are funding EVERYONE and getting fuck all in return. When WE need the safety net it doesn't exist.

I agree it’s such an unfair argument! Like any higher rate taxpayer that dares to complain is painted as an evil witch that doesn’t want to support disabled children 🙄. If we were just supporting those in genuine need that’ would
be fine that is what the system is for! But it’s now ballooned monstrously.

They weren't transparent about this and interest rates have increased. I have 3 different plans. When I was in school, I didn't want to go to University. I was persuaded to go. My parents were concerned about me going because they couldn't afford to support me. I worked 2 jobs whilst doing studying because my parents wanted me to have savings to go. I was told by the school, it wasn't real debt, low interest and it would be equivalent to a phone contract and I wouldn't pay it back until I earnt decent money. When I started paying it back, I was only paying off the interest which has been as high as 7%. My student loan amount was £53K. It is now £66k. By the time, I pay it off, I will have paid up to £110k back if I stay at my current wage.

So no, we were not told and there is a lot of discourse on this. We were effectively mis-sold which if it was in any other sector than government, they would be held accountable.

I'm happy to pay it back, I'm even happy for low interest to be added. I'm not happy about paying double what I borrowed when I work hard every day to contribute to public services and the older generation had it for free.

We were told in 6th form that the student loan would be the cheapest finance we’d ever have. Well it didn’t turn out to be true, my mortgage was lower at one point than my student loan. By a long long way.

Middle earners funding everyone and getting fuck all in return is so true! On a thread about council tax a few weeks ago everyone was quick to point out most of it goes on adult social care. Like that makes it ok and people are going to be happy to pay over £3k a year knowing that when the time comes, their house will be sold to pay for their own care.

I know it’s just 🤬.

£57.5K as a Band 8 clinician.

All I want for my £250 council tax is a bin for my recycling (and not a shitty bag that means rubbish gets blown all down the street when it’s windy)…

So, after pension contributions you're very close to the threshold. Buy a weeks annual leave and you'll be back under again.

Those people I described have mild to moderate learning disabilities...so it sounds like you do want vulnerable people to be without support.

The idea that it's the middle earners who are supporting our society is ridiculous too...who did we see as essential workers in the pandemic..care staff, bus drivers, shop staff, delivery drivers...none of those are midfield earners