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!

and tell you you’re privileged for not agreeing with them.

Shocking, you couldn't make it up.

You don’t get a Personal Allowance on taxable income over £125,140

Privileged?
How!?
What oportunitues or favourable odds have had that you havent?! None id say.

Ive worked hard, tried hard and have a reasonable outcome from it.
Im sorry the truth has upset you

I think I understand what you are saying. You are bringing home more money but not as much as what you would "think" since your effective tax rate went up?
It's like if you earned $50K and your tax rate was 20%, you'd have $40K. If you get a raise to 70K but your tax rate goes up to 30%, you'll have $49K.
Working twice as hard for 9K feels like it's not worth it but hopefully, more raises will be in your future.

The above is just an example. I have NO idea what anyone earns or any tax rates. Just showing that making more money, when the tax rate is higher, sometimes feels like it's very little. When my DH worked and one year, when they were short a person, he got a lot of OT. After a certain amount, the tax withheld would eat up a very large chunk of what he earned. It was still more than if there was no OT, but it wasn't as much as what people would have thought.

Yeah, it doesn't work like that.

Just because at £50,270 you tip in to the 40% tax bracket, you're not paying 40% on all your income. You only pay it on the bit over £50,270.

Use a salary calculator like this one to check if your deductions are correct. It's likely they're not. Your tax code is possibly wrong too.

We'd need more information here to be able to advise fully - if you can anonymise it, post a photo of your last month's payslip and this month's and we can tell you where it's changed/gone wrong.

Bottom line is, there's no way you should get a significant payrise but not be better off.

Also, check whether you'll need to pay back any Child Benefit using the HMRC tax calculator here

You must be able to see there absolutely should be a stage were benefits are no longer appropriate. If you want to resign and lose the prospect of future promotions or the benefit of increased pension payments go for it.

Another alternative is to negotiate a larger increase with your employer.

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.

Maybe in the past this was the case but income top up benefits are absolutely there to subsidise low paying employers in the long term.

That isn’t always true. Because of the pension bands I have had a pay increase but paid more additional pension than the pay rise value. If you also lose child benefit that’s another reduction in total net income.

If I work full time I receive £200 less in total net income than I do on 4 days. It’s the combination effect of pension, higher rate tax and loss of child benefit. If my total gross income is under £49k I do better than on anything between £50-60k. I need to get to around £63k to be better off and then it’s marginal.

If they moved the 40% tax band and CB cut off up with inflation it wouldn’t have happened. But the middle have been fucked over.

I’m not asking for violins but it’s a bit of a trap at the moment. I’m sat here hoping the union doesn’t win us any extra pay because it makes my life worse not better!

There can be a lot of odd quirks both with the interaction with tax/welfare system but also internal culture or policies. Eg the next step up in my organisation would likely bring a whole heap of stress and much worse work/life balance for about £75 a month. It doesn’t feel worth it now but in some ways is the critical step to getting the really big jobs. Sometimes you have to suck up the lack of immediate reward for the long-term gain. And sometimes it’s ok to decide it’s not worth it full stop.

Do you have an accountant?

Are you absolutely sure your payslip is correct?

There is of course additional pension and higher increases in the future to take into consideration.

Plenty of us think there are some entitlements that should be universal, in order to incentivise people to support the welfare system and keep paying in.

But even if OP thinks there should be an absolute ceiling, it's quite conceivable that she disagrees with where it's drawn. For example if she's a single parent who's just lost her CB but is aware of two parent households with higher incomes who still get it (full disclosure, this includes me and DH) it would be amazing if she didn't object to that.

Lazy journo post, who evidently doesn’t understand tax.

Daily fail…

I’ve not RTFT but you just pay the increase into your pension, that means your taxable income will remain the same and you won’t pay any more tax (or lose any other benefits eg childcare) than you do now. Ok, so you don’t get your increase now but you do still get it, in your pension. Surely better than resigning 🤷‍♀️

It's why I wouldn't go for promotion at my work: my salary would increase £2k per year but I'd lose my essential car user allowance at £1200 for the year and go up a bracket in tax and NI, which would make my net gain £0 (actually £56 per year, but for considerably more responsibility).

@Bucketheadbucketbum

I wonder whether this problem can be resolved by making a salary sacrifice at source so you pay extra into your occupational pension but your actual salary is reduced? You might want to speak with an independent financial advisor or check moneyhelper to see if that would work for you

www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/salary-sacrifice-and-your-pension.
🌹

It is possible, I applied for a job elsewhere for more ££ but it would also mean a couple of days in the office (an hour and half commute away) I'm 100% wfh right now. I put the salary into a tax calculator, plus my pension and student loan and I was about £20 better off (only I'd have train fare to pay so not really) the pension contributions were much higher, student loan payment increased and obviously tax and ni increased. I've realised to actually see any difference in take home pay I need to have a huge jump in salary to stop the increase being completely eaten up. It's quite depressing really. I rejected the interview for the job as it wasn't worth the hassle to be taking home the same, the lower employer pension contributions meant I wasn't gaining anything there either.

I guess you have tipped over £100k so you're losing your tax-free allowance and have lost access to the tax-free childcare thing where the govt tops up 20%? there is definitely a bracket between £100k and £120k that isn't worth being in. If it's on the road towards £150 - 200k then you have to grit your teeth, but certainly not worth staying in that bracket for life.

It is "socialism" that was previously giving OP the benefits she is moaning about not being given to rich people.

That can’t be right. You can’t get a raise + work 20% more hours and have no increase in take home pay.

I am curious to see the maths behind it. It is possible too that your HR has the wrong tax code for you if you’ve gone up a bracket, so what you are seeing is an error?

The point is not that people don't understand how tax works (though of course there may be inaccuracies in the OPs post- we don't know her specific scenario.)

The point is - and I believe this is the fundamental shift in attitudes to work over the last few decades - the topping up of lower wages means that people are almost encouraged to game the system:

How can I work the minimum I need, in order to maximise top ups?

Is it worth the additional stress and responsibility of taking a promotion when my net income won't be that much more?

Etc etc

Basically, most people (unless they're hugely driven or have an huge sense of vocation) will be motivated to work for the financial benefit. That's the reality. If the system changed to reward people for working more hours/ in more challenging roles, we'd see more people prepared to do so.

The delayed gratification argument is absolutely sound - I mean there's no doubt in the longer term that having a better job and having paid more into your pension pot will be better for you. But I think a lot of people find it hard to think long term when what matters is the money in your pocket right now.

I'm only more aware of this because I'm coming towards the end of my career, approaching retirement and thank god I took promotions and worked full time and have paid lots into pensions. I see too many women of my age- and yes it's usually women- who are heading for a grim time over the next couple of decades. Benefits and top ups are nice at the time but do nothing for you long term

This.
You don't lose 100% in tax.

However, if you receiving benefits from the government and now you support yourself then well done for escaping from benefits.

This. Some struggle to differentiate money from benefits top ups to earned income. Longer term the pension pot etc will outweigh. People do 'game' the system and make sure they work less to get more benefits top ups, that includes people who earn quite a lot but pay into pensions to ensure they qualify for childcare help etc... it seems millions do it, even fairly well to do ones.

So this isn't so much about paying 100% tax and it is more about losing access to benefits that you no longer need?

I presume that means that you're somewhere over the £100k mark. If that's the case, I think you can probably afford to pay for your own childcare?