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Is it ever possible for a pay rise to leave you worse off?

(26 Posts)
soundsystem Thu 26-Apr-18 20:44:11

Have been given a 2% pay rise this month, and have ended up with less in my pay packet than in previous months! Pension contribution has increased slightly, along with tax and national insurance.

So my pay has gone up by £82.34, but the deductions has increased by £98.91, leaving me £16.57 worse off!

Is this a thing? Any advice on what I should be checking? I did realise the a lot of the increase would be eaten up, but I was expecting to come out £10-£20 up!

randomthoughts Thu 26-Apr-18 20:49:40

I know there are some public sector paypoints where the pension contribution percentage increases and it isn’t tapered so you can end up with a lower take home pay.

DairyisClosed Thu 26-Apr-18 20:51:11

Presumably you were just below the next tax bracket and now you are just a vice the threshold?

Tobuyornot99 Thu 26-Apr-18 20:51:59

Yes this happened to me when I went up an increment (NHS), was about £20 a month worse off confused

Chasingsquirrels Thu 26-Apr-18 20:52:40

Auto enrolment pension contributions have increased this month, this would have happened regardless of your pay rise.

reallyanotherone Thu 26-Apr-18 20:54:50

It is the end of the tax year, there may be adjustments. My pay was different in march than it has previously.

Chasingsquirrels Thu 26-Apr-18 20:55:21

Sorry, that might not apply to you, I wrote it as if it was gospel..

What are the minimumauto enrolment contributionrates? Theauto enrolmentminimum is currently 5% of qualifying earnings of which at least 2% must be paid by the employer. In April 2019 this rises again to of 8% qualifying earnings of which at least 3% must be paid by the employer.

It used to be 1% each, so if you are on the minimum your contribution will have gone up from 1% to 3%.

soundsystem Thu 26-Apr-18 20:59:32

Thanks all

@Dairy I was wondering if that was it. My annual salary on paper last year was above the threshold, but I was off for part of the year (maternity) so my actual earning would have been below (iyswim)

dontcallmethatyoucunt Thu 26-Apr-18 22:01:12

Income tax is not retrospective

LBOCS2 Thu 26-Apr-18 22:32:27

DH's company gave out 2% pay rises across the board and everyone came out pretty even this month, as the auto enrolment pension contribution was increased. I didn't get a pay rise this month - we run to a different year end - and I'm £40 worse off.

nandaandm Thu 26-Apr-18 22:40:56

The pension contribution has risen. The pension scheme which we use is Nest and at the start of this tax year the contributions rose from 1% from both employer and employee to 2% from employer and 3% from employee. I'm also worse off by approx £13 per week.

Balancingact12 Thu 26-Apr-18 22:43:07

Yes , probably If you went from 49 to 50k then loose your child maintenance. You probably need to earn a couple of k more than that to balance it out depending how many dc you have.

CharlieWork Thu 26-Apr-18 22:48:13

Going up in tax brackets cannot leave you worse off. It won’t be to do with child benefit as you need to inform HMRC to self assess and I'm sure you would have remembered that. Most likely pensions conts.

ceeveebee Thu 26-Apr-18 22:52:39

Check your tax code - they are often wrong and might need correcting

dozydaisy23 Thu 26-Apr-18 22:55:55

I recently got a £6k payrise and only take home £100 a month more. Takes the piss so I feel for you OP.

Stinkbomb Thu 26-Apr-18 23:20:08

This month the personal allowance and NIC thresholds have increased, but the minimum pension conribs have also increased from 1-3% so that will offset the benefit.

Stinkbomb Thu 26-Apr-18 23:22:33

dozydaisy what % are your pension contributions? £6k payrise = £500/month, at higher tax that should equate to approx £220/month, so did your pay rise come part way through month or are there other factors?

BarbaraofSevillle Fri 27-Apr-18 04:35:16

Yes , probably If you went from 49 to 50k then loose your child maintenance

Er, no you don't, someone gets exactly the same child maintenance and child benefit at £49k and £50k. Baffled that this is still so widely misunderstood it's not hard.

Child benefit tapers away between £50k and £60k and it is possible for someone on £60k to be hardly any better off than £50k, especially if they have a large family, because on the extra £10k they pay 40% tax, national insurance, extra pension and possibly student loan repayments and lose child benefit, which would be around £3k a year for someone with 4 children.

soundsystem Fri 27-Apr-18 15:12:25

Hmm, still a bit of a mystery to me.

I'm not on auto-enrolment, so it's not that. I pay 5% into a company pension, and this has obviously gone up, but the difference is in tax and NICS.

Will check my tax-code!

dontcallmethatyoucunt Fri 27-Apr-18 15:43:43

Yes tax code changes. Perhaps to recoup underpayments from a previous year.

ORIam Fri 27-Apr-18 15:50:09

The new tax rules in Scotland mean someone earning £43,430 pays 21% tax and someone earning £43,431 pays 40% so yes a pay rise can certainly make you worse off!

Etymology23 Fri 27-Apr-18 16:27:14

ORI I may have misunderstood but I think they’ve added 1% to the bands: so 43,430 pays 21% on everything above the tax free allowance, and then £43,431 does the same to £43,430 and 41% on the remaining £1.

PattiStanger Fri 27-Apr-18 16:36:00

Sounds like maybe something to do with your tax code, can you compare this month's and last month's code?

dontcallmethatyoucunt Sat 28-Apr-18 11:47:58

The new tax rules in Scotland mean someone earning £43,430 pays 21% tax and someone earning £43,431 pays 40% so yes a pay rise can certainly make you worse off

That is NOT how it works. The higher rate is only applied to new money. Every £1 over the band.

dozydaisy23 Sat 28-Apr-18 17:21:47

@Stinkbomb 9.6% I think. My student loan is also taken too - could that account for it?

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