to think it's bonkers but also not to turn down this pay rise

[fortunatefamiliar]

Name changed as I will likely get flamed.

DH and I have a very good household income, I am not denying that. DH is in a sector which pays well and thankfully has not seen a covid-related downturn. (I'm public sector but in a good job).

He was due a payrise in April but they deferred them due to covid, very understandable. As it happens their sector has been largely unhit and so payrises are now being discussed. DH has been offered a very large payrise as during COVID he did a really big piece of work which has saved the company hundreds of thousands over the next few years (company has a multimillion pound turn over) - he came up with the idea, in his own time did a demo to show it could work and then supported his team to get it up and running. He definitely deserves the payrise.

BUT

if he takes it it, it means we will no longer be eligible for DSs 30 free hours and DD won't get hers next year when she becomes eligible. After tax, the payrise will not cover the nursery expenses of the 2 children and we will therefore be worse off.

This seems like absolute madness! But it will cost us around £30k in 3 years, and the payrise will be just shy of that over than time period (after tax).

I've suggested to DH that he counter offers for a LOWER rise, which will put him just below the threshold for the free hours. This is still a good rise.

The alternative is to ask for a rise that will cover the loss of the 30 free hours, but this is quite a bit more, taking in to consideration tax.

It seems like a totally bonkers situation to be in (5 years ago we were scraping money together to pay the bills!) but can anyone else an issue with rejecting a payrise?

[quote dulciepepp]@Alsohuman so do you disagree with everyone who lowers their taxable income &/or off-sets it? [/quote]
Of course I do. Partly because it tends to be the sharp elbowed affluent who have the opportunity to do it. You’ve got no option other than to pay your tax if you work in a supermarket or care home.

and the people who think that not being rich means any opinion you express on wage and wealth inequality and state responses to it is just nastiness and jealousy.

The OP has a good household income & will be paying a lot of tax. In terms of wealth inequality the focus needs to be on other forms of remuneration

"Researchers from Warwick University and the London School of Economics (LSE) analysed anonymised HMRC tax returns of higher earners and found that the average person with £10m in total remuneration had an effective tax rate of just 21 per cent – less than someone on median earnings of £30,000."

"And a tenth of people receiving more than £1m paid a lower rate than someone earning just £15,000."

@Alsohuman so people who work less hours to still qualify for tax credits are bad too?

Of course.

Well at least your fair with your judging!

The thing about using pension contributions to reduce taxable income is that it has other benefits for the government later. People saving more towards pensions now will pay more tax on their pensions when they're paid out later. They'll also be less dependent on funded nursing homes etc as they'll have more to contribute to their own care.

I object to the super rich hiding money in tax avoidance schemes, but I have no problem with people deferring when the tax is paid while also saving for their futures and being less reliant on a state funded retirement.

Are you insinuating you'll be earning over the 100k limit? In which case get real problems

If he is in a salary sacrifice pension take the rise and increase the amount that goes into the pension to stay under the threshold.

Yes, this. We did the same (well, DH did)

@molifly14

This is a real problem for OP.

Take the pay rise! Don’t be mad.

So you want the state to pay for your children?

@LunaLula83 by that logic the state is paying for most people's children. Hey ho, suck it up as we need someone to fund the ageing population!

OP im sorry you got flamed here, and I'm glad you've sorted the situation with the contract change.

The system is bonkers in how it allocates funding; one party earns 101k and you're not eligible, yet both earn 98k each and you are. Absolutely ridiculous.

And yes, I agree £68 a day is average to low, based on my SE location near London where I send DD to preschool.

Salary sacrifice childcare vouchers as part of his bonus?

LonginesPrime he did it as a side project in lockdown, in his own time. So no, they don't own it.

Yes, they've recommend we (he) gets legal advice, which they will pay for (we choose, not them). For the offer they've made him to buy exclusive rights.

There is also new, separate, contract of employment.

@fortunatefamiliar

Well it turns out it's not actually going to be an issue. DH has been given a new contract which need to get a solicitor to look for over. The company essentially want to buy the work DH has done, in addition to a pay rise.

The company have been very honest about the situation and the value DH has added. I'm quite flabbergasted to be honest.

Congrats OP (OP's DH!). Hope it benefits your family and affords you all a bit of financial security.

Your DH's company sound very decent BTW

Sounds good, OP.

Yes, they have to make sure he gets legal advice to avoid an undue influence claim that could invalidate the contract later (and cost the company heaps).

Personally (and obviously depending on the idea and its marketability), I'd advise him to think very carefully about selling the rights outright as opposed to licensing them (he could license them for exclusive use by the company for x years, or non-exclusively for longer, etc - there are lots of options!).

It sounds like he might be sitting on something quite valuable there!