⚠️ New HMRC Alert: Thousands Risk Losing Free Childcare 🚨
More Brits than ever are set to hit the six-figure salary mark, with numbers expected to soar over two million for the first time. But there’s a catch—earning over £100,000 a year might sound like a dream, but it could actually cost you!
Thanks to a “stealth tax” by Chancellor Rachel Reeves, income tax thresholds are frozen until 2031. That sneaky move means more people will face the £100,000 tax trap, potentially losing key benefits like free childcare. 🍼 Once a household member earns over £100k, your entitlement to free childcare hours is axed, regardless of other household incomes.
This isn’t just a one-off issue. An estimated 74,000 taxpayers were caught last year in the £100,000-£125,000 bracket, known as the tax trap—nearly double the number from five years ago!
Many of those affected are High Earners Not Rich Yet (HENRYs) who find themselves squeezed by a double whammy: frozen tax thresholds and rising inflation. Earning £100k no longer means living the high life—it often just means higher taxes and tighter budgets. 💼
🏠 Feeling the squeeze? There are ways to sidestep this tax trap! Consider paying more into your pension through salary sacrifice, which not only cuts down income tax but also saves on National Insurance contributions. Alternatively, charities can be your saving grace; donate to decrease your tax bill thanks to gift aid contributions.
If your employer offers salary sacrifice for charitable giving, it’s worth looking into for its tax benefits. But remember, not all employers provide these schemes, so personal contributions remain valuable.
Don’t let the tax trap snag your hard-earned cash! Look into your options and safeguard your financial future. 📊💡
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