Page 14 | DH and I going part time to deliberately reduce wages

Bucketheadbucketbum · 2023-03-18T13:35:09+00:00

Just working out the free childcare hours and actually DH and I will be muxh better off if we both dropped to 3- 4 day week to deliberately reduce our incomes. Would obviously be nice way to live too! Anyone else doing same? Seems mental but we've looked at it 100 times over and it's true!

Happyvalleyfan · 18/03/2023 23:50

ScruffyGiraffes · 18/03/2023 23:33

It's not jusy early childhood. They need before school care, after school care, care when I'm away on business trips, care for 13 weeks of holiday per year when I have 5 weeks of annual leave. As I said they noth have SEN so can't go to group settings/ clubs so my childcare bills will be £2k+ per month until they leave primary school, at least. That's with the TFC discount we get btw, by me keeping my earnings just under £100k which according to many on this thread is "immoral" because I apparently don't need it. 🤣 If I earn £100,001 then you can add another 20% to that monthly bill.

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I can really see how tricky it is for you to balance things - and it must be really frustrating that it is so difficult for you to improve position for your family financially.

Circe7 · 18/03/2023 23:55

@Happyvalleyfan
I can understand what you're saying in that I recognise that as a single parent with an earning capacity of at least £100k I am in a much better position than many people and long term someone with my earning capacity will probably be ok.

But I care much more about the short term than the long term right now. Like most single parents, there is huge pressure on both my time and money (I have a baby, a toddler who is quite traumatised by his dad walking out, a very demanding job and barely have enough to live on after childcare and mortgage). I care much more about my children having a reasonable standard of living and functional mother now than I do about my standard of living in retirement.

I have options for dealing with my pension later - working longer, huge contributions and living frugally after children leave home, downsizing etc. I don't really have options for improving my position now. If I work more I barely earn any more money and lose time with my children, who would spend 50+ hours in childcare. I can't afford any of the things which would usually make a high paying job more feasible like a cleaner, nanny, handyman, even ready meals. I just did some back to work coaching and all the advice was getting your partner to take on more of the childcare or housework or outsourcing, neither of which I can do at all.

@ScruffyGiraffes
I think there isn't the political will to make the system fairer for single parent families. Tax breaks for single mothers is never going to be a big vote winner and single parents don't seem to have much of a voice in politics themselves (probably because they are too busy).

So we're left with a system which puts single parents in a worse financial position than two parent families and proportionally paying much more tax together with a highly ineffective child maintenance service. It's frustrating because it would be so easy to tweak some parts of the tax and benefits code to make things easier for single parents (like doubling the threshold at which you have to pay back child benefit for single parents, for example, or raising the threshold at which you cease to qualify for childcare subsidies). Obviously you need more childcare as a single parent if the child's father isn't involved because you can't stagger working times / pick up and drops around childcare at all.

I work in tax and if I ever find the time and energy I might try to do something about it but don't hold your breath!

ScruffyGiraffes · 19/03/2023 00:22

Circe7 · 18/03/2023 23:55

@Happyvalleyfan
I can understand what you're saying in that I recognise that as a single parent with an earning capacity of at least £100k I am in a much better position than many people and long term someone with my earning capacity will probably be ok.

But I care much more about the short term than the long term right now. Like most single parents, there is huge pressure on both my time and money (I have a baby, a toddler who is quite traumatised by his dad walking out, a very demanding job and barely have enough to live on after childcare and mortgage). I care much more about my children having a reasonable standard of living and functional mother now than I do about my standard of living in retirement.

I have options for dealing with my pension later - working longer, huge contributions and living frugally after children leave home, downsizing etc. I don't really have options for improving my position now. If I work more I barely earn any more money and lose time with my children, who would spend 50+ hours in childcare. I can't afford any of the things which would usually make a high paying job more feasible like a cleaner, nanny, handyman, even ready meals. I just did some back to work coaching and all the advice was getting your partner to take on more of the childcare or housework or outsourcing, neither of which I can do at all.

@ScruffyGiraffes
I think there isn't the political will to make the system fairer for single parent families. Tax breaks for single mothers is never going to be a big vote winner and single parents don't seem to have much of a voice in politics themselves (probably because they are too busy).

So we're left with a system which puts single parents in a worse financial position than two parent families and proportionally paying much more tax together with a highly ineffective child maintenance service. It's frustrating because it would be so easy to tweak some parts of the tax and benefits code to make things easier for single parents (like doubling the threshold at which you have to pay back child benefit for single parents, for example, or raising the threshold at which you cease to qualify for childcare subsidies). Obviously you need more childcare as a single parent if the child's father isn't involved because you can't stagger working times / pick up and drops around childcare at all.

I work in tax and if I ever find the time and energy I might try to do something about it but don't hold your breath!

I'm sure you're absolutely right: we're all too exhausted to campaign for it! Very disappointing though that any women who claim to be feminists don't care at all about this issue to take it up on our behalf. The ones who aren't busy trying not to drown.

As you say very simple to fix, just implementing the system that almost all comparable countries have where allowances/ thresholds are applied on a household unit basis (so therefore separate ones for people housesharing, or adult DC living at home, but removing the gross unfairness of families with two adults getting double the tax free earnings than a single parent has, double the earnings before higher rate tax applies, double the earnings before withdrawal of child benefit, personal allowance, childcare funding etc). It's basic fairness, it would hugely reduce child poverty, it would massively boost equality in the workplace and would also increase tax revenue. There's a reason other countries do this, and it's not because their Governments are altruistic. It's because it works.

But ours is too thick to do it. Like you say is focused on "vote winners" rather than evidence-based policy and what will work, and so depressingly this will only change if other women who are not single parents stand up and say to their MPs "hang on, this is unfair and you need to change it". But very few care and so single mothers end up doing two jobs in half the time AND being taxed more and nobody cares.

If just a few people who have read this thread do something about raising awareness of the issue that will be a start, maybe. Because you're right, we're all so exhausted just keeping our heads above water that none of us can campaign to get it fixed. It impacts women at every level of earnings and is disgraceful, deliberate discrimination.

I am so sorry you are struggling in a similar way. Sending solidarity and I really hope things get easier for you.

crazyaboutcats · 19/03/2023 00:25

If you can make 3-4 days each per week work it sounds ideal for both yourselves and your DC

Yoyo2021 · 19/03/2023 00:33

The only thing is that if you reduce it down to meet that criteria one of you will need to go in the job centre each week to have coaching to get one of you up to full time work.

ScruffyGiraffes · 19/03/2023 00:36

Yoyo2021 · 19/03/2023 00:33

The only thing is that if you reduce it down to meet that criteria one of you will need to go in the job centre each week to have coaching to get one of you up to full time work.

Lol! Of course they won't when they'd still be paying more than most people's annual salary in tax and neither of them claiming any benefits?!

Nicecow · 19/03/2023 01:49

LizzieSiddal · 18/03/2023 13:41

Sounds like you don’t care that other tax payers will be working to pay for your child when you could actually afford to pay for it yourself.

Each to their own I suppose.

This. If you have no ethics, go for it

Dorisbonson · 19/03/2023 02:56

I earn more than that. I would pay a lot of tax in the UK enough to pay for a couple of nurses salaries. I won't work in the UK because tax is too high. Other high earners are leaving the UK too. That means taxes will increase on people that earn less eg middle income people. The brain drain just means the UK becomes poorer and poorer. How much extra tax will you pay because people like me are gone?

Dorisbonson · 19/03/2023 02:57

Meant to send that to a reply to some socialist person on this thread who said something crackers earlier.

Dorisbonson · 19/03/2023 02:58

Bernadinetta · 18/03/2023 14:22

Boo hoo, poor you only earning £6000 a month, what a hardship.

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See above.

Crumpledstilstkin · 19/03/2023 03:44

I'm requesting the same. I checked and would have less disposable income working full time and paying childcare than if I work 3 days a week. How am I supposed to look my children in the eye and say I chose to pay money to spend less time with them?

@ScruffyGiraffes @Circe7 You might not see it but a fair few of us have seen the situation and are talking about it. I'm planning to speak to my work HR about it as well in the hope they can take it into account on some way. It's awful you're in that situation and morally repugnant that your families have basically been sacrificed on the altar of some politicians image. As an aside, if you can then compressed hours really helped me. I think the sweet spot was something like 3.5 days in 3 but you might need to go for 3 in 2.5 to get the same benefit with a slightly higher starting salary assuming the 30 hours from 3+ are involved. A sympathetic manager would generally sign that off if they can.

bigbabycooker · 19/03/2023 04:17

@Nicecow

So, I assume that people who live in cheaper parts of the country and who earn, say, £49k each with decent disposable income should not be claiming child benefit? Or should be voluntarily paying it all back? Or people receiving housing support must choose the cheapest, shittiest property? Where do you stop with the argument that no one should claim anything when they could afford to do something themselves?

Nicecow · 19/03/2023 04:43

bigbabycooker · 19/03/2023 04:17

@Nicecow

So, I assume that people who live in cheaper parts of the country and who earn, say, £49k each with decent disposable income should not be claiming child benefit? Or should be voluntarily paying it all back? Or people receiving housing support must choose the cheapest, shittiest property? Where do you stop with the argument that no one should claim anything when they could afford to do something themselves?

Why should others have to work and pay taxes, so others can choose to work less and have them fund it? Like I said, if you have no ethics then go for it. What if everyone had this attitude, who is going to actually be paying for it? Benefits are meant to be a safety net, not a lifestyle choice

Marleymoo42 · 19/03/2023 05:19

'Parents choose not to work to receive more state benefits'

Go for it. As long as you don't have issues with people at the other end of thhr salary spectrum with fewer choices who play the system.

Mumoftwosweetboys · 19/03/2023 06:34

bigbabycooker · 19/03/2023 04:17

@Nicecow

So, I assume that people who live in cheaper parts of the country and who earn, say, £49k each with decent disposable income should not be claiming child benefit? Or should be voluntarily paying it all back? Or people receiving housing support must choose the cheapest, shittiest property? Where do you stop with the argument that no one should claim anything when they could afford to do something themselves?

Exactly this @bigbabycooker
Where does it end?
I don't think people get that OP (and others in her position) will still be high tax contributors (probably higher than average and more than the people complaining on here).

HistoryFanatic · 19/03/2023 06:53

Imagine the different reaction if OP was saying they are working less or giving up their job because they want more universal credit.

I am not sure on the moral area on this.

Zoe303 · 19/03/2023 06:59

I have a question - my DS is 2 at the moment and a while ago when we were looking ahead at the free hours for when he turns 3 we thought that as high earners we’d be eligible for 15 free hours instead of 30. Has the new system got rid of that completely so high earners get zero hours? We thought that was the case but I can’t find anything definitive. Or was there never 15 hours for high earners?

Hardbackwriter · 19/03/2023 07:16

HistoryFanatic · 19/03/2023 06:53

Imagine the different reaction if OP was saying they are working less or giving up their job because they want more universal credit.

I am not sure on the moral area on this.

If she was in UC there would be no expectation at all that they both worked full-time with a preschool child. In fact, the expectation is that you don't have to work at all until the child is 3, then you only have to work 16 hours until they're 5, then you only have to work 25 hours until they're 12. I haven't seen much outrage over this despite the fact that it clearly supports people working less than they could 'at the expense of others'.

Again, I really don't get the backlash to OP here. If she had just posted saying that she had two young children and her and her partner both worked full-time she'd have got lots of faux-concern head tilts, 'could you not look to go part-time?', 'they're only little once', 'I don't understand why people have children just to put them in nursery', etc. She might have got the odd comment about considering her own pension but absolutely no one would have said that this was an ideal scenario because it maximised their tax contributions.

EmmaDilemma5 · 19/03/2023 07:24

It's unethical and it's paid for by the rest of us.

But yeah, if you're the kind of people who think about yourselves before anyone else, and play systems to get all you can, then, do it.

But don't boast about it on a public forum and don't call yourself the squeezed middle. You're the tight higher earners; you always want more.

Dibblydoodahdah · 19/03/2023 07:31

@EmmaDilemma5 is it unethical for stay at home parents to get NI credits when paying zero into the system? Because there’s nothing unethical about having a better work life balance so you get to see your kids more when you are still paying enough tax to cover what you take from the system.

You are not paying anything for people earning £100k plus. They are net contributors. You are paying for people who don’t contribute enough tax in comparison to the amount they take from the system. That’s assuming you are a net contributor yourself.

Original poster

Bucketheadbucketbum · 19/03/2023 07:32

ScruffyGiraffes · 18/03/2023 20:59

I'm not speaking for everyone on Mumsnet.

I've explained the factual distortions in the tax system that are disincentivising work for the people who pay most of the UK's tax (not the super rich!) resulting in low UK productivity and tax revenues and therefore no money to improve public services etc for everyone. This is fact. Hunt's own research stated this. The IFS have said it's a "dog's breakfast". The Times and FT and Guardian and others have written articles about it. So yes of course higher earning people cut down their hours because it's not worth them working more. This is factual and is happening across the economy, research shows it clearly and indisputably. This is bad for everyone.

I have also explained how single parents (almost all women) are doubly impacted by this, giving the example of my own situation, because these tax thresholds are doubly punitive for us. Others in the same situation have also said so, on this thread and in the research. We pay huge amounts of tax and can barely afford to live because the UK tax system applies all of these thresholds on an individual not household basis, impoverishing us and our children. So for us, even less incentive to work more and actually, unsurprisingly, many do not bother or give up entirely.

I've seen the calculations. If I'd never bothered at all, with degree and professional qualifications and all the hard work to build a career and buy a house and instead claimed benefits we would have TWICE the disposable income per month that we do now. That is disgusting.

I want to work. I want to contribute. I always have done so. I should however be left with enough to provide my children with a decent life, when I'm paying £34k per year into the pot to help other people. And to be able to take a promotion without us then having LESS money per month than we do now and being unable to pay my mortgage.

If you want a country where there's money to pay for services and benefits then making it impossible for higher earners to better their circumstances by working more - while bettering everyone else's at the same time by paying even more in - then penalising them to the extent that it's not worthwhile for them to work is not a good idea.

Exactly this

We decided our options are to cut hours and deliberately earn less or emigrate

OP posts:

StatisticallyChallenged · 19/03/2023 07:36

ScruffyGiraffes · 18/03/2023 23:16

Would promotion involve a lot of extra hours for you? If not (or if it's manageable), would it be worth just taking the promotion and stuffing the whole damn lot in your pension for now?

I know this wouldn't improve your current situation, but my thinking is that it would then put you on the path towards the next promotion or next job move which might get you over the point where it starts to make a difference to your take home pay (at which point you stop stuffing money in your pension like a crazy lady, accept the tax man eating that chunk, but at least start seeing some more money each month).

I think salary sacrifice for an EV would also be a way to pull it down and would improve your family life if you are having to get rid of your old car. Assuming your employer has a scheme of course.

Thanks for the suggestions. Per this budget apparently now I could stuff enough from the next promotion up into pension without breaching the £100k of post-pension earnings and therefore losing tens of thousands in net pay and losing the house. We'd still get no more money as net pay from me taking the promotion which is what we desperately need and is not allowed, but as a stepping stone it might be worth it IF we could trust that the higher pension contribution allowances would be maintained while I was stuck in that situation. Then it might just about be doable - to get no more money now but put it into pension and just work work work for the next promotion when we might actually be allowed to keep some of the money in my monthy salary in a few years time followimg a second promotion.

But, if I took the promotion then Labour reverse the pension changes as they have pledged to, if in power in just over a year, those higher pension contributions would not be allowed, then huge cliff-edge effective tax rates would kick in for breaching the £100k threshold where we'd lose tens of thousands of net pay overnight. We'd be screwed and lose our home, even though on paper I'd have a higher salary than now, because I can't actually access any of that money as net pay because of this tax system. I just can't take that risk as the sole provider for two children, that politicians will just take our home away (for the crime of being promoted!). Although I suppose that'll happen anyway if Labour get in if they raise taxes further on anyone earning over £80k as they said previously. I genuinely have no more money to pay any more rises. There's nothing left. Labour don't seem remotely interested in equalising the tax system to give single parents the same allowances as couples, any more than the Tories are. Nobody is on our side.

We'd only be better off in terms of actual take home pay if I get two promotions, and I'd need another 4-5 years to get to the second one. I'd have to sacrifice yet more time with my children in what's left of their childhoods after they've been through a huge trauma already, on a hope and prayer that politicians won't reduce pension contribution limits again and by doing so make us homeless and bankrupt while I work for the second promotion. It's just too risky.

Benefits like EVs still count as taxable income so sadly that wouldn't help escape this cliff edge where if you hit £100k you are hit with an extra tax bill of tens of thousands of pounds, just for earning £1 more.

It is such a mess. I want to carry on with my career and do more for my children but until these tax issues are solved we are paralysed, treading water and desperately trying not to drown.

Thank you for your replies though, and to everyone who's been supportive. A lot of the time it's like speaking to a brick wall and nobody cares so it means a lot and I really hope more women will stand up politically to campaign to end the tax discrimination against single mothers, it does so much damage.

I'm not 100% sure re the childcare side but I think specifically EVs under salary sacrifice might work. Normally the value of salary sacrifice to be declared is the higher of the salary given up or the bik charge, but for EVs it's always the bik charge. Done under s/s this reduces your net taxable income - the sacrificed money isn't on your p60. I don't think HMRC make it clear and it's not covered in their examples but I think the crucial bit is it's already off the net taxable income number.

"Calculate a non-cash benefit
For any non-cash benefits, you need to work out the value of the benefit.

If you set up a new salary sacrifice arrangement, you’ll need to work out the value of a non-cash benefit by using the higher of the:

amount of the salary given up
earnings charge under the normal benefit in kind rules
For cars with CO2 emissions of no more than 75g/km, you should always use the earnings charge under the normal benefit in kind rules"

Completely get why you wouldn't take the risk but worth mentioning for others in same boat. Even if labour get in it will be a couple of years before they can mess with the allowances and thresholds so you could be back out the other side by then, depending on career trajectory of course. It's a gamble though and an absurd position to put anyone in.

HistoryFanatic · 19/03/2023 07:38

Don't call yourself the squeezed middle, OP BTW. I don't think you know what that is. I don't have much sympathy. If you can afford to pay childcare, health care etc you pay it.

StatisticallyChallenged · 19/03/2023 07:48

HistoryFanatic · 19/03/2023 07:38

Don't call yourself the squeezed middle, OP BTW. I don't think you know what that is. I don't have much sympathy. If you can afford to pay childcare, health care etc you pay it.

Do you know the sort of cliff edge these families are hitting?

Here's an article which has worked out the numbers - for a family with two kids in London, tipping over that threshold would instantly cost them approximately £27k per year in net income. That's not reasonable or affordable. That's after already paying more tax per year than the govt would pay for childcare for those two children.

I don't believe that if you were previously earning 99k and were given a 2% pay rise you would just shrug and accept being over 2k per month worse off.

ifamagazine.com/article/hunts-new-childcare-plans-make-punitive-100000-earnings-cliff-edge-eye-watering/

HistoryFanatic · 19/03/2023 07:49

Hardbackwriter · 19/03/2023 07:16

If she was in UC there would be no expectation at all that they both worked full-time with a preschool child. In fact, the expectation is that you don't have to work at all until the child is 3, then you only have to work 16 hours until they're 5, then you only have to work 25 hours until they're 12. I haven't seen much outrage over this despite the fact that it clearly supports people working less than they could 'at the expense of others'.

Again, I really don't get the backlash to OP here. If she had just posted saying that she had two young children and her and her partner both worked full-time she'd have got lots of faux-concern head tilts, 'could you not look to go part-time?', 'they're only little once', 'I don't understand why people have children just to put them in nursery', etc. She might have got the odd comment about considering her own pension but absolutely no one would have said that this was an ideal scenario because it maximised their tax contributions.

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She is trying to play the system to get something she isn't entitled to and she can well afford to pay for.