AIBU to refuse extra hours when most of the pay goes in tax?

You not however paying £85K tax on £150K earnings but moving from paying tax of less than £60K per annum in arrears to paying £60K per annum in the current tax year. It's a cashflow issue not an increase in tax.

They are not paying £85K tax on £150K earnings. They will not even pay £60K on £150K earnings. In a given tax year they might pay more but it will all shake out in the wash.

A big problem with people reducing their hours is when there isn't a ready supply of additional, qualified/experienced workers to make up the hours. This is a very real problem with GPs and dentists and is contributing to the waiting lists and difficulty in getting appointments, etc.

If all such professionals are going to work half time, then we should have doubled the number of Uni/training places, but we didn't.

Precisely…thank you!

Up until 2024 many businesses (partnerships) didn’t have a year end aligned with the tax year end of 5th April (ours was 30th June)
This changed in April 2024 known as basis reform, as a result I am actually paying tax in advance and will be for 5 years from 2024.

Depends. If I had nothing else to do then probably. If I had something better to do then no. It the opportunity cost to your time. If it was discretionary then I would sometimes do it, sometimes not

I do not think you are redistributing wealth though, just decreasing it for all. If I work less and pay less tax and consume less overall, I am simply doing a bit of potential value destruction. Like clean my own house, buy less luxury goods, decide to not move house and pay stamp duty again, wear same old clothes, buy less expensive food. My quality of life is the same, but less purchasing is leading to fewer jobs not more. And my employer isn’t getting anyone else in either.
And for many people, going officially part time actually translates to cash in hand jobs and increasingly includes people like teachers who are tutoring.
There comes a point when the tax system is so ridiculous and politicians do not pay their taxes (looking at Rayner and now Polanski) and plenty of people find ways to not pay the full amount.
Hence all the research has always showed that a simple tax system and not too high rates actually leads to greater tax take overall.

@MynameisnotJohn Completely agree. It doesn't necessarily make sense from a business perspective to have more people on fewer hours to cover the work. Which is why I think policies like this are so great because they are encouraging individuals to make choices that redistribute wealth (or the opportunity to gain wealth ie the hours available to be worked) so that instead of a few very well paid people being really well off, more people can have those opportunities.

And whilst employing two people to cover the same hours is more expensive in terms of management and so on, you might well find between them those two people get more done at a higher quality level than one person running themselves ragged.

I think governments will need to get pretty smart with all of this in the coming years so that we don't end up with far more people having their jobs, or potential future jobs, taken by ai, leaving them with extremely limited employment opportunities whilst others work long hours in ai-proof roles.

In that case the tax and NI structure needs to be re-jigged to make it more attractive to employers to spread the work over more people

I get that, but not sure why is it being disputed that someone has paid £85k tax out of £150k earnings? It’s entirely possible if the £85k doesn’t all relate to the same tax year but is being paid to HMRC out of a single tax year’s earnings.

But your just paying the tax a bit sooner because of the payments on account. By the time the first payment on account is due, you're 10 months into the tax year, so will have earned 10/12ths of the profit, but are paying 6 months worth of tax, the second payment in July being 4 months after the tax year end. So you're still never paying "in advance" - it's always in arrears.

Compare that with someone on PAYE who pays tax every month, so pays the tax several months sooner than a self employed person would.

You may be paying 1.5 years worth of tax, but you're 1 year and 10 months in, so it's still paying in arrears.

I understand the extra tax paid in your first year but in second & subsequent years no extra tax is paid. You end up paying tax in the current tax year (like PAYE) when previously if you were self-employed you paid last year's tax in the current tax year.

If you get to six figures you just put more into your pension so that you fall below the threshold, or ask for a chunky payrise as everyone knows about the effective tax rate.

I think you misunderstand. The first year that you pay on account, you are paying approx. 1.5x your tax obligation. It will adjust in future years but the first year you pay all the tax due in the previous tax year plus 50% of the expected tax due in the current bill. (I’m not self employed but had a rental property where this tipped us into payment on account)

I just think that you must be mistaken in your figures. Paying "on account" doesn't mean paying any more tax it's just that self-employed used to pay tax in arrears on previous tax year but now pay on account in current tax year.

Calculating tax as PAYE will be the absolute worst case scenario. As self-employed your tax will be almost certainly be less than PAYE for same income & definitely will not be more. On an income of £150K you should pay no more than £60K in tax whether PAYE or self-employed.

”Additional hours” no, because I am salaried not hourly paid and, like most people earning above £100k I work more than my contracted hours anyway.

I spent about 3 years stuck in the Scottish marginal tax bracket hell, and as a single income family we needed the extra money so, at the time, I couldn’t afford to put it in my pension.

However, it paid off career- wise and I now earn over £250k, so I am glad I didn’t restrict my career just to avoid paying tax.

Well I’ve looked at that calculator and it is clearly meant for people who are employed.
Self employed people pay “on account” towards the next bill so that is where the discrepancy is.
Paying towards the next bill isn’t voluntary so it’s still included in the figures required to be paid each 6 months.

Perhaps another self employed person could comment as it feels like you’re either insinuating I’m making it all up or trying to undermine me.

I’d also say the calculators are not that accurate in general, based on salary. I’m not sure why. They already come out more generously and I get less take home in practice.

Also, I think a lot of people are looking at gross salary only when they state their tax. It often ends up being quite a bit more tax paid, as you’re taxed on the private healthcare, dental care, any wellbeing benefits provided at work etc

Well as a retired A&E consultant you won’t be aware of how self employed GP partners are paid then will you

You would be wrong in that assumption. I know how GP Partners are paid & taxed. For a given income as a self-employed GP you will pay less tax than a consultant on PAYE.

Also, I’m not paid in a salary way as such so that calculator is useless to me

It gives a good indicator as to the maximum amount of tax you could possibly pay. If you are a GP Partner earning £150K you will pay less tax than a consultant on a £150K salary.

Trouble is it costs more per head of personnel. They need pensions and management and some accommodation and equipment. Easier to flog one highly paid person to do the work of two if you can get away with it.
I think about this a lot. Technology might have been expected to deliver a 3 day week for everyone but instead it’s long hours for some and unemployment on benefits for many. Companies need fewer staff but they don’t react by getting less out of the staff they do have!

Also, I’m not paid in a salary way as such so that calculator is useless to me

Well as a retired A&E consultant you won’t be aware of how self employed GP partners are paid then will you?
(I do also have a hospital clinic role but that is paid in the usual PAYE way and taken into account on the tax return)

I am a retired A&E consultant so aware of how doctors are paid. There is still no way you are paying £85K of tax on a salary of £150K. You can confirm this by using the Salary Calculator that I linked to. Tax & NI are under £59K on a salary of £150K. If you are paying an extra £26K per year in tax this can only be because of arrears.

It is true honestly.
I paid £50k this Jan and will pay another £35k in July on account.
Obviously pension and professional expenses are taken off the top figure.
I don’t have a student loan.
The year before total earning was slightly less so I will have paid a bit extra on account but not loads more, maybe a couple of thousand to cover that short fall.
The other thing that affects me at the moment is the base reform period changing from April 2024, so this involves me paying an extra 8-10k per year until 2029 (basically instead of paying an extra 12 month of tax upfront we can split it over 5 years) so had it not been for this my bill would have been 75ish K.
I’ve been a Dr for 20 years and have given up trying to understand it as it varies so much year by year. My accountant assures me it’s correct.
But it doesn’t change the fact that this system penalises me to work more especially now my youngest is at school and I have a free day in the week.

That’s OK until you have maxed that out.

I lost the thick end of 100k bonus payments between the time my DS was born and the time he started school due to the ridiculous cliff edge rules.