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?

@fortunatefamiliar
Tbf I don’t read the DM so maybe I’m not really au fait with the term’s wider meaning, but surely it describes someone who helps themselves to public funds unnecessarily, bonus points if in a time of great economic uncertainty when a financial crash is forecast?

Don’t think of what it is now but in the future once children no longer need childcare hours.
You never know what may happen in the future around job losses etc or pay freezes.

No-one wants to be rewarded and leave themselves worse off.

I'd ask the employer for more so that you won't be.

I can't actually believe the threshold for free hours is as high as it is.

People are aware the government aren't just doing this just to be nice?

It's specifically for middle - higher earners to encourage women to work and pay taxes. The maximum the gov funds is £6.30 an hour so it costs them a maximum of 7k a yr & it's only funded for a year and a half. Someone who earns 40k & decides childcare is too expensive & won't return to work until school stops paying tax & NI. However if the extra 15 hours keeps them in work they will be paying more than 9k in tax/ni a yr.

OP, I get it.

I work part time, no great salary, husband has a good wage but got a large bonus last year, which if he had taken it, would have just tipped his wage over the £100k threshold for one year. That would have meant the year our DD was going entitled to the 30 free hours for the first time would have been stripped away, and after taxes/NI taken off etc would have left us considerably worse off. As it stands, DH negotiated part of his bonus to be delayed so his wage came under the threshold so we could still get the 30 free hours.

It's not unreasonable to not want to take a wage increase or bonus if it's going to leave you worse off.

What a lovely problem to have!

But yes, look at increased pension contributions.

I don't know how old your dc are (haven't RTHT), but surely having 2 in nursery both qualifying for funded hours is a very short-lived thing? It would last about a year at most. If you have a now 3 year old and a 2 year old who isn't yet qualified, your 3 year old will be in school next year and you'll be back down to paying for just one in nursery.

Take the pay rise. It means in future years, when your dh gets promotions, you'll be in a very (enough more) comfortable position with no childcare to pay for (or very little) and two very good salaries.

When I went back after I had my first, nursery was only just covered by the contribution of my salary. 6 years later, I make more than double that. It would have been pretty dumb to turn that down just because my income wouldn't add anything to the pot when all expenses were accounted for.

Don’t forget that everyone gets the first 15 hours regardless of income, nursery fees go down post aged 3 as ratios go up and you only pay 80% of the cost of nursery as you can access the HMRC childcare top up scheme if you don’t use vouchers - at this cost the HMRC scheme would be far better than even both of you getting vouchers.

A) if he takes the pay rise any further cost of living rises will be a percentage based on a higher salary

B) going from 30 free hours to 15 cannot mean a difference of £30k, are you factoring in being able to use cheaper preschool once they are 3, the oldest must be starting school soon too?

C) can you find cheaper child care?

What a lovely problem to have! it is. Definitely on the list of first world problems, I'm not denying this.

Yes, I suspect it is short term 'pain' for long term gain, though once we've done the pension maths, it may not actually be an issue, which is good.

Whilst I get it: being worse off because of a payrise is galling, I think that we should all want the state to be as efficient as possible. And by that I mean that the wealthiest pay the most tax and receive the fewest benefits and the truly needy benefit from a welfare state.

It's like the mega rich claiming furlough or bail outs. Or apple not paying tax. Although these things are within the law, it's about whether it's right and proper to do it.

And right now, the state is spending/borrowing a lot and could do with those who have a choice about such things as paying the right amount of tax, or claiming free hours, or whatever make choices that benefit us all.

Having said that because it's a significant pay rise I don't think you will be worse off.

@alwaysraining123

£100k in the SE with two children just isn't that much and doesn't stretch as far as you think. The OP is right to work out/ask what is financially best for her family.

Whilst OP is of course perfectly reasonable in trying to work out what is financially best for her family and act accordingly, the old "in this area £100k really isn't much" line is awful. It really is a lot of money. In April 2019, average wage for a full time employee in the South East was £636 a week, or £33,072 a year. An income of more than three times the regional average really is "that much".

But what if you think longer term - once the 3 nursery years are over you will be glad of the extra money?

Take the pay rise provided you can salary sacrifice into a pension so salary is just below limit.
Company should be happy with this as it saves them employers NI and maybe pension contributions.
Agree with company you have option in future to salary sacrifice further due to pay rises.

the old "in this area £100k really isn't much" line is awful. It really is a lot of money. In April 2019, average wage for a full time employee in the South East was £636 a week, or £33,072 a year. An income of more than three times the regional average really is "that much".

The issue is so much wealth is separate to income so a high income means you earn more than X but it doesn't mean you are rich.

Even if you are worse off short term you will be better off in the longer term. A few years ago DH hit just over the threshold for CB which meant that we effectively had less money (not the sums your talking about but just using it as an example), had he turned that down I'm pretty certain he wouldn't have been offered another payrise the following year, that payrise was then used when he moved to his next company with more payrises following (this is not some weird stealth boast about yearly payrises, just illustrating in some industries it can be a yearly thing...unless you get a reputation for turning them down!).

You need to be thinking longer term, a higher salary this year is a better starting point for future negotiations, especially if his industry is not affected by Covid.

I agree that there's something wrong with a system where hard work results in a pay rise that makes you worse off financially. And a lot of cut off points in salaries do exactly this. And that's not fair to many, many families in the squeezed middle, since they are paying a lot in tax, unlike the truly wealthy who know how to avoid doing so.

Still infuriates me that a family earning £99 k as a couple can keep CB as long as both spouses earn less than £50k, but a family where one spouse earns £10k and the other £50k, loses it. Madness.

[quote velourvoyageur]@fortunatefamiliar
Tbf I don’t read the DM so maybe I’m not really au fait with the term’s wider meaning, but surely it describes someone who helps themselves to public funds unnecessarily, bonus points if in a time of great economic uncertainty when a financial crash is forecast?[/quote]
It's a grotesque term, so why you felt the need to unilaterally introduce it to the thread isn't clear.

Take the pay rise and increase pension contributions for a while. You’ll still get the 30 hours, you’ll be adding more to your pension for future years and you’ll see the benefits of the pay rise. What a nice position to be in.

You would be crazy for him not to take the pay rise. It's such short-sighted thinking for all the reasons everyone else has said. Please factor in the pension advantages, he will be lucky to be able to pay in more than most and you will have a comfy retirement frmo the sound of it..

Also, It hasn't always been the case that you got 30 free hours. It's only a few years ago that it was 15 hours, that's what it was when ours were little and we earned nowhere near what you and your DH earn. We just paid the rest out of our below average household income! Funding cuts are coming, OP, you can be sure of it, and we could well be back to 15 hours before you know it.

WAs it you who said you wouldn't be better off once one child goes to school as wraparound and holiday care would cost a lot of money. How did you calculate that? Presuming you both have annual leave allowances, most families use that during school holidays and/or have reciprocal arrangements with other parents so that they don't need to pay for holiday clubs every single day of each holiday. Are grandparents near enough to mind for one day of the week each holidays too? My sister negotiated a part-time working week during school holidays (NHS too) when she got a new job, any chance you or DH could do that? Most people use a mix and match system for school holidays and get by, and before you know it, they're old enough to be left to their own devices (literally ) for a day or two a week during the school holidays. Holiday clubs aren't really a thing once they reach secondary age, although sometimes there are sports camps for Years 7 and maybe 8, so you won't have those costs then.

Yes, look at maxing out pension if that possibly takes you below the 30 hours threshold. But if it doesn't, think to the future, not just the here and now. You never know what could happen, you could get ill/have an accident next year, and be unable to work FT and you would be kicking yourself at having turned down DH's payrise.

ZombieLizzieBennet funny, that’s a pretty good word for the situation I described.
And surely most people’s contributions on this thread have been ‘unilateral’

@velourvoyageur

ZombieLizzieBennet funny, that’s a pretty good word for the situation I described. And surely most people’s contributions on this thread have been ‘unilateral’

Nobody else on this thread decided to drag in from nowhere a vile term like benefits scrounger. You clearly disagree with OP, but that doesn't affect the fact that you're the one who introduced the terminology to the discussion. It remains a mystery why you felt it necessary.

He should take the payrise! If he’s getting annual salary increases, he’ll be earning more and more each year (Any bonuses?). Plus imagine if he told his boss I don’t want a payrise for 3 years as I want to keep claiming benefits! If he’s shown himself to be worthy of a massive payrise, then he’s probably going to do well every year. In a few years, those increases will be huge.

Using the term to dehumanise the working class - vile, yes. Calling out people who are actually admitting to playing the system when they don’t need to - sorry, don’t think it warrants this level of affront. It’s a literal use of the term which has been divorced from the class context and is not being used to refer to a group.