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?

You can only claim the 30 hours from the term after the child turns 3 until they start school.

dulciepepp yes. Just.

Need to work out exactly what it takes it to and what his pension contributions would be.

Justaboy nah, he just spotted an issue within their IT system that he has now fixed. It means they can do away with t
paying a different company to maintain something that wasn't being utilised. It's not something that can be extrapolated to other companies really.

Plus I refuse to be a trailing spouse!

Mind blown that this situation is being seen as a problem. My heart frikken bleeds for the OP.
I'm not daft enough to believe that most people wouldnt be trying to figure out what is best finacially for the family... But find it hard to beleive that people who are in jobs that command 100K+ a year are not smart enough to figure out the long term gain of a pay rise. I cant even be arsed to figure out the OP's dodgy maths but simply, in 3 years when you have no childcare to pay out they'll be 20K+ a year better off. FFS.

Sorry, but there just seems to be something slightly morally reprehensible about comparatively wealthy and successful people trying to figure out how to manipulate things so as to extract every last benefit from the state

Absolutely!

Well first work out the contributions because if it scrapes under no need to worry @fortunatefamiliar

@fortunatefamiliar when did you eldest start claiming the 30 hours?

I'd take it: next year's pay rise, and any bonuses, will be based on the pay he has. They are nearly always percentage increments. Also government cuts are likely to come and this government clearly does not prioritise childcare: if you are paying childcare out of income you are less vulnerable than if you are dependent on a benefit continuing.

I do understand where people are coming from to say with a 100k+ household income should you really be using subsidised childcare but at the same time you have to remember that their tax and NI contributions will be considerable over their working life (assuming OPs partner continues to climb the ladder). Why should OPs family be forced to be 15k worse off because they earn slightly over the threshold, they are not earning considerably more.

I also fall into this area - not 100k but others thresholds and by gaining 70£ a month payrise I lose child benefits of nearly double that. So I would be worse off.

I do think there’s a grey area where you are neither struggling financially or super wealthy but somewhere in the middle. It does feel like you get shafted in quite a few ways.

SantanaBinLorry why won't I have childcare to pay in 3 years? That's a bonkers claim.

I've paid in far, far more tax than I have taken out. And we will continue to do so. I pay for those not working, those working but claiming UC. I have absolutely no issue with a society which has a benefits system. I think our current benefits systems is pitiful, and would happily pay increased tax for more benefits, even if they aren't benefits directly to us. However I do begrudge a system where you become worse off at certain salary points - whether it is when you lose eligibility for CTC or UC or a situation like ours. There should be a sliding scale, where you are only ever the same off, or better and never worse off, otherwise it creates issues like these.

@LivingOnAnIsland

I'd rather you paid your nursery fees, and then there is more money for the people that actually need it. YABU.

^^ Agree with this. What you are considering doing may be legal, but it is morally reprehensible.

It is also pretty shortsighted, as future wage rises should be based on your current salary, therefore in the long run you will profit by your dh taking the offered wage rise.

To be honest, I think your dh’s employers would be pretty gobsmacked as well, if he refuses a wage rise to play the system!

LivingOnAnIsland if it worked like that, I'd do it. But under a Tory government it will never, ever work like that. Less for me DOES NOT equal more for others.

Take the rise. Pay it into his pension. If he moves job in the future he'll be in a good bargaining position if on a higher salary. If he is made redundant in the future he'll be entitled to more.

What would be the difference between you and a benefit scrounger?

I also fall into this area - not 100k but others thresholds and by gaining 70£ a month payrise I lose child benefits of nearly double that. So I would be worse off.

And this is another area where people commonly tailor their work and take home arrangements to maximise the amount they have in the pot. It becomes inevitable when you have bottlenecks. Further down, people also make decisions based on withdrawal of top up benefits. It's the reality.

The free childcare isn't going to last forever though is it. I would pay yourself and take the hit in the short term. I can't actually believe the threshold for free hours is as high as it is.

Just to chime in with the golden advice others have offered - assuming his employer will allow it, taking the pay rise and salary sacrificing back below the £100K threshold is the ONLY sensible thing to do here.

velourvoyageur I'm not really sure what you mean, I'm not sure what a benefits scrounger is beyond a vile term the daily mail uses.

Your DH would be mad to turn it down because of what are essentially short term child care costs. The benefits and rewards of accepting the pay rise are much more than just the extra income.
For example, if his employer contributes to his pension too it's likely to be based on a percentage of his salary so bigger salary=greater employer contributions=bigger pension on retirement.
If he has any other linked benefits such as death in service that may be a multiple of his salary so the more he earns the more would be paid out.
Future pay rises will likely be a percentage of existing salary therefore bigger salary=bigger rises.
Plus, as others have pointed out, if he turns the offer down he will likely never be offered as much again (especially as it's essentially a reward for a one off cost saving idea) and he may look foolish to his employer.

Bare in mind the 30 hours childcare could change with little notice. It's a relatively recent thing and in my local area was due to be introduced after the summer break. Now it's been delayed because of Covid-19, much to many parents' dismay.

Take a step back and examine ALL the benefits of accepting the pay rise in the long term vs the extra cost of childcare in the short term

Take the pay rise, don't take the handout you don't need from the taxpayer - that money could go to the NHS.

I think you have your answer?

DH should take the pay rise and it's very short sighted not too.

Do your calculations properly to understand the actual cost/loss (30 free hours doesn't work out as good as it sounds).

DH take salary sacrifice and pay in to his pension (he's completely entitled to do this anyway and is very sensible if there's surplus income).

OR don't pay in to the pension, take the small loss now, and be reassured that you don't need to pay for childcare forever.

So you have a spouse on the cusp of earning over 100k, you have two DCs, you refuse to be a trailing spouse, you need to work for your mental health, you earn a solid salary (just under 80k).......and you’re asking how to work the system so the taxpayer can fund your life choices? Is that right?

merrytombombadil oh that did make me laugh. As a long term employee of said NHS that is never going to happen. I just see pay freezers, funding cuts, job losses and ultimately privatisation in my future. I love your optimisim though.

Increase pension contributions to bring you under the threshold. That's what I would do as otherwise some years my bonus would push us over the threshold. It's never a bad idea to put extra money in your pension especially at the moment when investments are rock bottom and can only go up in value. It's not fiddling the system; it's a perfectly pemissable variation.

I don't think you're being selfish to look at it like that. Many people will be benefiting from the large taxes paid from your household income. Besides the eligibility rules would allow for the two partners to each earn 99k (£198k collectively) a year, but one earning 100k and the other 20k - not eligible. So it's all a bit arbitrary.

I think "if you can afford it you shouldn't have it for free" is a bit short sighted. Should higher rate tax payers not be allowed to use the NHS or send their children to state school? Those sort of restrictions can cause higher rate tax payers to up sticks and leave the UK, which is a bit like killing the goose that lays the golden eggs.

ARoseInHarlem you read that wrong. I earn nowhere near 80k. I said our current household income is somewhere over 80k. With the vast majority of it being DHs income.

*I don't think you're being selfish to look at it like that. Many people will be benefiting from the large taxes paid from your household income. Besides the eligibility rules would allow for the two partners to each earn 99k (£198k collectively) a year, but one earning 100k and the other 20k - not eligible. So it's all a bit arbitrary.
*

Yes it is incredibly arbitrary. Like with CB - both ear £49k and get CB, one earns £50k and the other nothing, no CB.

It isn't exactly a fair system.