Is it pointless earning £100,000 with young children

Albermarle

 Child Benefit charge for one parent earning £50k - £60k

On the other hand relatively well of people salary sacrificing for their pension to less than £50K , can still get this child benefit , as well as the 40% tax relief. Which seems a bit daft to allow that.

kinger101

I agree the cliff edges and potential for >100% tax are ridiculous and bourne out of a need for Chancellors to pretend our highest tax rate is 45%. But for most earning this amount, it is easily mitigated by paying more into your pension.  

Personally, I think all the cliff edges should be removed (including HIBAC which is now too low a threshold due to fiscal creep) and a more progressive income tax system should be introduced instead.    

Flixton86

I’m in a similar position - will go over the £100k rate for the first time this year, mainly due to a bonus I don’t know the amount of.

a couple of things I am not clear on - for help with nursery fees the criteria is you have to have taxable income of less than the £100k. Does the tax free personal allowance mean you deduct this from the £100k? So in reality you have to be earning c£112500 before you would lose the benefit? I also presume the current 6% I pay into the company pension would also be deducted? Is that right? 

prowla

It's always been the case that there's an overlap between some people on benefits and some working.

I remember back in the 70s a relation coming to our house and boasting that he got more than my dad, who was working; I respect my dad for booting him out and telling him never to come visiting again (nice one, dad!).

I always feel that I am in the tax group which is viewed as the one whose wallet is a resource for the Government to plunder from; at the moment I have one son living with me because he can't afford to get his own place, anther who I am helping through uni, and another who is about to finish post-grad education and is likely to come back home for a while.

That said, I've got no plans to retire; what do retired folks do anyway?

So I guess I'll just continue being the government's cash-cow; the band between people who need help and those who can affort to pay accountants to play the system.

Jeremy535897

Flixton86 said:

I’m in a similar position - will go over the £100k rate for the first time this year, mainly due to a bonus I don’t know the amount of.

a couple of things I am not clear on - for help with nursery fees the criteria is you have to have taxable income of less than the £100k. Does the tax free personal allowance mean you deduct this from the £100k? So in reality you have to be earning c£112500 before you would lose the benefit? I also presume the current 6% I pay into the company pension would also be deducted? Is that right? 

No. You have to have adjusted net income of over £100,000 to lose the free childcare. You can deduct pension contributions you pay, grossed up, but not contributions your employer pays, or those made by way of salary sacrifice (as these already reduce your income).

Flixton86

Thanks, but for tax free childcare it specifically says taxable income of over £100k, it doesn’t say adjusted net income. That is what confuses me, as the first c£12k of what I earn isn’t taxable, so not clear if I deduct this or not.

Dazed_and_C0nfused

Flixton86 said:

Thanks, but for tax free childcare it specifically says taxable income of over £100k, it doesn’t say adjusted net income. That is what confuses me, as the first c£12k of what I earn isn’t taxable, so not clear if I deduct this or not.

It is taxable income, it's just the Personal Allowance means no tax is paid on it.

sheramber

Flixton86 said:

Thanks, but for tax free childcare it specifically says taxable income of over £100k, it doesn’t say adjusted net income. That is what confuses me, as the first c£12k of what I earn isn’t taxable, so not clear if I deduct this or not.

https://www.gov.uk/tax-free-childcare

If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year you will not be eligible. This includes any bonuses you expect to get.

Your adjusted net income is your total taxable income before any personal allowances and minus things like Gift Aid.

Flixton86

The declaration I need to sign every three months says:

our household income

Will you earn at least £152.00 a week, before tax, for the next 3 months?
Do you expect to have a taxable income of more than £100,000 for the current tax year?

I dont think it is particularly clear, though as the reply above says taxable income and adjusted net income look to be essentially the same thing. Easy to see how mistakes can be made though. 

Dazed_and_C0nfused

Flixton86 said:

The declaration I need to sign every three months says:

our household income

Will you earn at least £152.00 a week, before tax, for the next 3 months?
Do you expect to have a taxable income of more than £100,000 for the current tax year?

I dont think it is particularly clear, though as the reply above says taxable income and adjusted net income look to be essentially the same thing. Easy to see how mistakes can be made though. 

I think the most common difference between taxable income and adjusted net income is "relief at source" pension contributions.

These don't reduce your taxable income but do reduce your adjusted net income.  And also increase the amount of your basic rate tax band.  And have basic rate tax relief added by the pension company i.e. for every £100 you pay they add £25.