AIBU to leave a higher paid toxic job for less?

Yes, I’ve been in a very similar situation recently and have got out. I was able to find a job on similar pay, although forgoing a few benefits, absolutely the best decision. My mental health and confidence had taken a nosedive and life is too short for that.

I'd definitely take the lower paid job OP. Years ago I was in a very similar position, and was going home every night crying and feeling like I just couldn't do it any more. In the end I spoke to my DH and my Mum, who both said that no job was worth feeling like that. I'd been applying for jobs for a couple of weeks, and had a few interviews, so went in next morning, and put my resignation on the bosses desk. I was waiting for her to call me into her office, when my phone rang, it was an agency who I'd interviewed through, ringing to offer me a job with considerably less money, than I had been earning. However, rather than risk being unemployed, I accepted, thinking that I could always move on again if I really couldn't manage financially. However, as it turned out, it was the best decision I ever made! The new job was great, I was happier there than I'd been anywhere else, and two years later, when I became disabled, I couldn't believe my luck, because the company I'd moved to had illness insurance. To cut a long story short, this insurance paid me almost my full wage, with a 5% pay increase, or cost of inflation each year, and also paid my pension contributions. I haven't been able to work again since, and am SO glad that I took a leap of faith, and accepted that job, which saw me though years and years of what would otherwise been a very tough time financially.

Take the lower paid one if you can make it work financially.

You’ll leave your current role sooner or later, so might as well be with another job to go to.

Mental health over wealth.

I’ve been there. Took a £20k pay cut. But being tearful on the train into work every day was not worth it. Now I’m back up to my original salary but in a job I love.

I wouldn't stay in a job that was causing me this much stress. You have some slack built into the system, I am sure. I often say "I can't afford to earn less" but what I actually mean is "I don't want to take stop doing nice things with my spare money". It seems that the situation is similar here. The thing is, you can always make more money but you can't make more time or more health.
There is another issue of the threat of performance improvement. Once they do manage to put you on one, say goodbye to a clean reference. Better to leave now.
Fixed term contracts, in my experience, are not as scary as they sound. My previous job was fixed term, it got extended as soon as we were half way through the term. My current job started as a fixed term contract, I was made permanent after 2,5 years. Of course, this may well be industry-specific but still..
Talk to your husband and see if you can make it work for a year. And keep looking for plan B which affords you more security and more money.

If your roof needed fixing at a cost of £19k would you spend it or would you let the house rot?
It's never an easy call, you need to talk to your DH, but make sure you protect yourself because you're all you've got.

It's a big step for a fixed term contract. Have you considered asking for part time? Your manager will still be an arse but you'll have more down time and less stress and it will still be a permanent job. It is for them to justify why you can't go part time rather than for you to explain why you should.

Otherwise, hold on for a permanent alternative.

I've just bailed from a job as it was making me so ill there was no way to stay. I'm picking up temp work for now, which is quite a pay cut, but I really had no choice. If you can find a job now, before you end up so stressed you're sick then I'd take it. Even if it's only a year long. It could well be extended and even if it's not, you've got a year to think about what to do next.

I walked out of a well paid job when the new boss turned out to be a horrendous misogynist who told me he and the other directors didn’t like the fact I was paid similar to the male directors. Didn’t have a job to go to but took any fixed term contract offered and work my way back to what I was earning. Better to jump than be pushed!

good luck!

Can you try looking for a job that pays the same?

I'd get out. I've not been in exactly this situation but I have stayed for far too long in a toxic work environment, ended up stressed out and unwell.

Lower paid job sounds like a good idea, especially as you aren’t performing well in the current role, it’d be better to get out now before going on performance measures. Can you not look for a job that pays a bit more than the one you’ve applied for though?