Work doesn't pay

[Bucketheadbucketbum]

Just that really

Got a promotion . Started new role in april. This promotion was one that I secured after a hard fought year, means taking on extra hours and much more stress . Big impact on work life balance, kids etc. Worth it I thought ....

NO IT ISN'T!!!

Seems since this I've entered a near 100% tax on my payrise, so thanks to current tax setup in uk, my take home pay is static!!!!!! yet responsibility and hours gone up

Planning to resign the promotion from my job

Ridiculous situation!

So is it lost benefits that's the issue then?

You are suggesting your take home pay is the same. That's only possible if something isn't right. Going over a tax and ni bracket doesn't mean you get no additional pay. It really doesn't.

I don't think NI ever goes above the 13.25% initial rate, and i wouldn't want to rely on benifits which can be reduced at any point.
Take the promotion. Use it to get another promotion. OK, so you don't get a massive increase this time (I'd be amazed if it's 100% taxed tho) but that shouldn't be the case with the next rise if you've hit a peculiar blip in the system this time.

You also loose free nursery hours. So it can actually work out better to earn less than £100k until you start to earn over about £120k.

First world problems and all that.

And there is the drip feed.

Benefit's are there to support people whilst they can't support themselves in the short term, not for you to rely on them forever.

Sounds like you can support yourself now you have had a nice pay rise so no longer need them.

I don't pay 100% overall, but the additional amount I've earnt is effectively taxed at 100% as tip over a tax bracket, ni bracket, benefits lost

So net at the end of the month I'm no better off for working almost 20% more hours

Presumably your pension contributions will have gone up as well though, which will also benefit you long term.

Well quite it does sound as though she has been promoted beyond her capabilities if she can't understand her own payslip and tax code.

It’s not how tax works but it is how the combination of tax and benefits work at some tipping points.

The extent to which to which working families are subsidized by the state and what this means for us socially is a bit of a blind spot. It’s semi-complicated and the media don’t talk about it much (and when they do it’s often just hyperbole).

It sucks, OP, but unless you think this is the last possible promotion for you, you need to recognise it as a difficult stepping stone that can lead to much more significant income (especially if current difficulties are partly because of a loss of benefits related to children you have).

Losing your benefits doesn't mean you are paying 'nearly 100% tax'. It means you lost your benefits. Because you don't need them anymore. That's a good thing.

I always seem to pay more tax in April - due to end of FY I assume - could it be that? Perhaps see what your take-home is in May…
Agree with others it would BU to resign your promotion & prob wouldn’t reflect well on you at work.

Are you tipping into 40%, 45%, over £100k? Important to know to understand the impact.

If the higher end, stick the difference in pension until you get high enough to take the benefit in take home pay.

So you have (quite correctly, legally AND morally) lost benefits due to earning more? No issue then.

The £100k-£125k bracket is notoriously cliff-edge due to tax & benefit interaction - I’m assuming that’s where you are.

Sensible advice above re whether you can get to £125k+ and/or if you can cut hours or add to pension.

Neither tax nor NI account for you effectively getting nothing.

So essentially it's benefits loss. So you're working enough to take yourself off benefits now. It is what is it is. Benefits are not income, it's a stop gap until you can support yourself enough.

The next step up will come to you I'd guess.

Your OP is misleading. This is not about paying more tax, this is about the benefits you have lost versus the amount of increased take home pay you now receive.

Rather than resign, what about viewing the promotion in terms of your career progression over time.

Okay so you are no longer entitled to some benefits, and want to reduce your hours so you still get welfare benefits?

The OP hasn't helped herself with either her title or explanation, but there are lots of cliff edges in relation to our tax system, benefits and how they intersect and it's quite conceivable she's hit one of them.

With that in mind, I wouldn't blame you for fucking it off OP, but do think carefully about whether it's the best thing for you and yours. Could you put any extra into a pension, for example?

I personally have avoided an increase in hours when it would've taken me to a point where I'd only be left with about 60% of the take home before paying for the increased childcare, so I'm not saying you have to stick at the job. Just make sure it's an informed decision.

This.

Or as PP said look at whether it's possible to divert some of your income into a pension to reduce the impact

I hit a tax wall a little while ago which meant lost benefits, increased tax, etc. I managed for the last year of childcare by increasing my pension contributions. It sucks, but I guess you always have the option of turning down the promotion if you aren't happy.

When you say you’ve lost benefits are we talking child benefit? If so you could consider paying more into your pension/ gift aid which then reduces your net income and could allow you to claim child benefit?

Alternatively look to the future of your career progression when children are no longer at home would giving up the promotion now be detrimental for your future prospects?

Even if this promotion is of negligible value, unless it's your last one ever, it's likely to be a step up the ladder that will lead to better opportunities to come. It's an investment in your future career. You have to go up the ladder one step at a time.

Tax doesn’t work like that in the U.K. if your gross pay increase then if all else is the same then so will your net.

Could it be the tax code is wrong or you’ve moved up a rung on the amount on your pension contributions?

You got a payrise AND are doing 20% more hours and you're earning the same?

I think I understand something of the frustration that the OP is experiencing. I have recently been turning down opportunities for progression because they would result in a lot more stress and time away from my family for very little financial reward, owing to the loss of Child Benefit. I have a disabled child who qualifies for DLA but this doesn't come near to covering the cost of one parent having to be available for child care pretty much all the time for medical and other appointments.

I have to think of the overall impact on my family, not just earning the most money. Before having children I was a higher rate taxpayer for many years and never begrudged paying a penny of tax and NI. But the marginal financial benefit for me of taking on more responsibility and stress was worth it. It simply isn't now I have children.

Having frozen the tax and NI bands in a time of high inflation, the government has brought so many more people into higher tax/NI bands and losing what used to be a universal benefit. If the government wants a more productive economy in the UK, it shouldn't be disincentivising (sorry, I hate that word) people from achieving more.

It sucks, but I guess you always have the option of turning down the promotion if you aren't happy.

This is broadly what it comes down to.

If you're currently no better off for the extra work you're doing, it's a question of weighing up any other positives versus the negative of having less free time. Whether you're likely to want and get other promotions, how long the childcare costs are liable to last, how do you weigh work/life balance, could you mitigate some of the impact with bigger pension payments or similar. Some of these things are straightforward questions of fact, others are specific to your circumstances and values.

I had a £30,000 pay rise over the past 2 years, I don't really need it on a day to day basis so it's all going into my pension. Delayed gratification makes work pay. Think of the bigger picture.

Are you sure the tax code is correct and have you considered pension and student loans if you have any? My last promotion meant a small net gain (not helped by loss of child benefit and pension contribution increase at the new salary point) but I'm paying more into my pension and more off my student loan so all is not lost.