- Financial coach Philly Ponniah claimed making £120,000 is worse than £99,000
- She explained that someone on the former loses most of the tax-free allowance
- To boot, it is also above the threshold for 30-hours of free childcare benefit
A British financial coach has claimed that £120,000 is ‘one of the worst’ salaries possible for a Brit to earn.
Philly Ponniah justified the comment by explaining that it is around the threshold when a number of employed Brits’ benefits are lost.
Although a £120,000 wage is not quite in the uppermost income tax band, it is sufficient to lose result in loss of any free childcare and is beyond the point when you start losing your tax free allowance.
Ms Ponniah said on her TikTok page: ‘Earning £120,000 is probably one of the worst salaries you can get in the UK. You get hit twice.’
In the caption she added: ‘You’re worse off than those earning £99,000.’
Brits get an annual tax-free allowance of £12,570, however, when earning over £100,000 this allowance goes down by £1 for every £2 earned.
This means that by £120,000, the allowance is almost entirely gone.
At the same time, couples in which one partner earns an adjusted net income of over £100,000 – which is the case for the hypothetical £120,000 earner – lose their 30 hours of free childcare benefit.
Ms Ponniah added that the band between £100,000 and £120,000 incomes is ‘an effective 62.5 per cent’ tax rate.
According to The Salary Calculator, someone on £99,000 will take home just shy of £70,000, roughly 70 per cent of their wage before tax, whereas someone making an extra £21,000 will take home just roughly £6,500 more for that difference in salary.
A graph laid over the clip suggested that, minus the childcare expenses if required, this makes it more beneficial to earn £99,000 up until one earns £144,500.
Many who saw the viral clip, which has surpassed a million views, found it hard to sympathise with a £120,000-a-year earner, nevertheless.
‘Yeah, my 22.5k a year is way better. Glad I dodged that 120k bullet. Phew,’ quipped one.
Others said: ‘I’m not gonna feel sorry for someone who earns too much to have a personal allowance…
‘Yes the tax on it is ridiculous… but I’d still rather be on 120k that literally any amount under it, so it’s not the “worst” salary…
‘My heart bleeds for the upper tax bracket [laughing emoji]…
‘This is so unbelievably out of touch [laughing emoji] love it…
‘Earning £120,000 is not, actually, one of the worst salaries you can get in the UK…
‘Thank for the advice – I best not advance in my career and not earn more money to avoid this situation. Cheers!’
However, understanding the outrage, Ms Ponniah did clarify under one comment: ‘I definitely should have said for tax purposes.’
