What is the £100k income ‘cliff-edge’?
Reported by The Guardian Business, not nibnow. We are not the publisher of this story, only the source is.
Earning over £100,000 can reduce take‑home pay because the personal tax‑free allowance is withdrawn and childcare subsidies are lost, affecting families with small children.
The tax-free personal allowance starts to be taken away when you hit six figures, and in England you lose access to childcare subsidies Believe it or not, there are downsides to earning more than £100,000 a year – particularly if you have small children. “It’s the ambition of many people to reach an income of £100,000, but it does come with an unexpected sting in the tail,” says Sean McCann, a chartered financial planner at NFU Mutual. Continue reading...
In the UK, the personal allowance is the amount of income you can earn before paying income tax; it is gradually removed once earnings exceed £100,000. Childcare subsidies in England help families with the cost of early years care, and eligibility is tied to income levels.
- •Watch for any government proposals to adjust the £100,000 threshold or reform the personal allowance tapering
- •Monitor discussions about changes to childcare subsidy eligibility criteria
- •Follow reactions from financial advisers and taxpayer groups to the impact of the current rules