A MONEY expert has caused a stir by claiming £120,000 is “one of the worst salaries.”
Philly Ponniah took to TikTok to share her finance advice – but she received a frosty reception.
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Understanding the outrage Ms Ponniah clarified that the amount 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 high enough to result in loss of any free childcare and is beyond the point when you start losing your tax free allowance.
Ms Ponniah baffled her her TikTok viewers when she told them: “Earning £120,000 is probably one of the worst salaries you can get in the UK. You get hit twice.”
In the caption she continued: “You’re worse off than those earning £99,000.”
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British people get an annual tax-free allowance of £12,570, but, when earning more then £100,000 this allowance goes down by £1 for every £2 earned.
This means that by £120,000, the allowance has almost gone.
And in couples where 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 explained that the band between £100,000 and £120,000 incomes is “an effective 62.5 per cent” tax rate.
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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, According to The Salary Calculator.
A graph pasted 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 watched the clip, which has racked up a whopping 1 million views, found it hard to sympathise with a person who earns £120,000.
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One person said: “Yeah, my 22.5k a year is way better. Glad I dodged that 120k bullet. Phew.”
While another added: “‘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…
“This is so unbelievably out of touch, 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!”
But, understanding the outrage, Ms Ponniah did clarify under one comment: “I definitely should have said for tax purposes.”
It comes as time is ticking to make the most of tax-free savings allowances this year, as millions risk losing out.
The “use it or lose it” annual ISA allowance will refresh on April 6.
And this year, new rules on the savings accounts take effect, including a rise in the minimum age for opening cash ISAs.
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Here Harriet Cooke explains the changes and how to find the most lucrative home for your cash ahead of the deadline.
