Net pay due to 60% tax

[OneSparklyGoldBear]

Anything earnt over 100k is taxed at 60%. As a result is there any point of earning over 100k in the sense that you have to put everything above 100k into a pension to stop 60% cut.

It seems like max that can be made is 5.7k?

I used to work in a sector of freelancers and it was so common for people to say this "there's no point" thing about going over one of the tax bands.

I've never understood it. Extra money is extra money. Even if you feel you "have to" put the extra into your pension, it's still extra pension. Where's the downside?

Plus, if you're self employed, the extra contract might be the one that brings you recognition or an important contact. Or if you're employed the pay increase is either a pay rise - so free extra money - or attached to a promotion or high will have its own intrinsic benefits and opportunities.

Upwards is a good direction to be moving in.

It can be a real problem when you also stop qualifying for any help like child benefit/ funded hours, with student loan repayments etc you can be significantly worse off!

The biggest drop off is more like £160k taxable as you can put £60k pa into pensions.
But you may as well push on beyond, more is still more.

Apologies may have been bit confusing.
My comment is more you will never see more than 5.7k net pay a month as PAYE employee?

How do you mean?

Anything over 100k you have to put into pension?

Is the 60k cap both your contribution and employer contribution?

How is student loan affected

I don’t understand your point @OneSparklyGoldBear… you don’t ‘have’ to put everything over 60k into your pension. If you get too far over you then hit pension tapering so can’t do that either.

Many people take home more that 5.7 as a PAYE employee, they just pay the tax

Apologies may have been bit confusing.* My comment is more you will never see more than 5.7k net pay a month as PAYE employee?

OFC people get more than that in a monthly pay packet.

You don't "have" to put the extra into pension for tax efficiency. A lot of people choose to, but it's not compulsory.

Besides some people are on PAYE salaries of much more than that. It becomes (proportionally) much less of an issue as you near £200k pa and beyond.

5.7k net = 100k gross salary

Anything above that is taxed at 60% so what is the point of getting more.

For examole to get 6k net you probably need 105k? But you are losing lot to tax

But 6k net salary requires 105k gross no?

By that point you have lost a chunk to tax although you have earnt 6k net.

That only applies for those losing the childcare benefits though- there not an actual 60% tax rate.

top rate tax in England & wales is 45% and 48% in Scotland

That only applies for those losing tax free childcare on top of losing personal allowance though- there not an actual 60% tax rate.

top rate tax in England & wales is 45% and 48% in Scotland