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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Work doesn't pay

205 replies

Bucketheadbucketbum · 02/05/2023 14:59

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!

OP posts:
Thread gallery
8
Trez1510 · 02/05/2023 17:29

Tulipsemerging · 02/05/2023 17:27

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.

Show quote history

This thread has been an eye-opener for me. Very high earners milking the system to feather their own (pension) nests. Possibly the same people who, in future years, will bang-on about 'scroungers' .....

grosslyunfair · 02/05/2023 17:34

I'm quite sympathetic to this because there are some cliff edges where you lose a lot of any extra- as others say you have to push to be quite a way over before you see a meaningful net benefit. The 100-125k band is particularly harsh.

I don't get any benefits but work part time and am just below the 40% tax band. When work ask me to do extra hours I usually trade for time not money because going into the next band has implications for savings rate interest, dividend taxes and so on. I'd have to do more than 2 weeks' work to compensate for what I'd lose elsewhere.

brunettemic · 02/05/2023 17:36

BashirWithTheGoodBeard · 02/05/2023 16:31

Not really. However persuasive some of you might find your arguments, people not being any better off for their extra work are not, in the real world, going to be impressed by someone else's moral code. OP hasn't said whether this is about top up benefits, going over the personal allowance, child benefit, reduction of free hours at 100k or one of numerous permutations, and hasn't been very clear about it either. But the principle is always the same

What this really comes down to is the extent to which the downsides can be mitigated, eg with pension payments, and whether OP feels the longer term positives mean it's worthwhile playing the longer game. That's all.

Show quote history

The tax thing and the all pay rise income being lost simply isn’t true though, hence there’s a bigger picture at play that we’re not being told about. It’s therefore not an unreasonable assumption that this is the cause.

MrsS2009 · 02/05/2023 17:41

I entered a new tax bracket with my pay rise and have lost £100 a month HR said this is right, it makes no sense to me, I’d rather not have had the payrise I have for them to look into again

Mistletoewench · 02/05/2023 17:42

incrediblehux · 02/05/2023 16:04

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.

Same, currently weighing up pros and cons of being offered a new job, but will it give me flexibility with my disabled child.
My husband luckily works from home so can pick up some slack.
I would love to increase my hours and go for promotions, but it’s hard.

Greeneyegirl · 02/05/2023 17:48

Surely this can happen. It happened to me once. I got a decent pay rise but the increase in my pension contribution, student loan payment, tax etc meant I was taking home £13 a month more for a lot more work and stress

BashirWithTheGoodBeard · 02/05/2023 17:50

brunettemic · 02/05/2023 17:36

The tax thing and the all pay rise income being lost simply isn’t true though, hence there’s a bigger picture at play that we’re not being told about. It’s therefore not an unreasonable assumption that this is the cause.

Show quote history

You're mixing up two things here. Yes, there's obviously a bigger picture. As there is for most people when it comes to whether it's worthwhile working more.

That doesn't mean someone airily claiming there's no issue when a person is no better off after everything is taken into account has 'nailed it'. They've done the exact opposite. The fact that OP is even considering not taking the promotion, or that people have advised her about other options such as higher pension contributions, is evidence of that.

Pipsquiggle · 02/05/2023 17:59

What was you old wage and what's your new wage?

There are certain pay rises that aren't worth it, particularly if you just edge into a new tax bracket.

This is where you would negotiate your pay up.

BluebellBlueballs · 02/05/2023 17:59

I don't get the 100% tax thing but high earners can end up losing a shit ton.

My brother is on 400k and probably takes home half of that

He still gets 200k a year net so I can't cry too hard for him

RedTulipsSpring · 02/05/2023 18:00

Trez1510 · 02/05/2023 17:29

This thread has been an eye-opener for me. Very high earners milking the system to feather their own (pension) nests. Possibly the same people who, in future years, will bang-on about 'scroungers' .....

Show quote history

“Milking the system” do explain?

freyamay74 · 02/05/2023 18:02

This thread has been an eye-opener for me. Very high earners milking the system to feather their own (pension) nests. Possibly the same people who, in future years, will bang-on about 'scroungers' .....

That's my point: a system which encourages people to game it doesn't really work for anyone, high or low earners.

If I'm doing a low paid, perhaps pretty grotty job, and I can find a way of working the minimum hours to get top ups- I'll probably take it.

Equally if I'm working in a high earning high pressured role, and I can find a way of keeping my tax lower so the more of the money I earn is mine- I'll probably take it!

We're all human. We can bang on all we like about the morality of it or the satisfaction and sense of achievement of earning all your money rather than relying on benefits, but at the end of the day, people generally want to feel that the harder/ more they work, or the more responsibility they carry, the more they'll be financially rewarded. Not just in the future but now.

A pp said upthread that the bottom line is, the lowest paying job should leave you with significantly more money than relying on benefits. There should be a tangible difference. I'd add to that: the hours someone puts into that lowest paying job should be proportionate to their net pay. It's bloody ridiculous that someone capable of working a normal 37 hour week doesn't feel the financial rewards are enough of them, and can make the choice to work far fewer and get top ups. It's bonkers.

Northbright · 02/05/2023 18:04

Effieswig · 02/05/2023 15:24

No, that’s not how it works.

Theres no tax bracket that’s ‘almost 100%’ so tipping over into that tax bracket will not see the rise taxes at almost 100%.

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Shes right. See the article in the Telegraph today. The public sector pay rises need to be paid somehow.

Trez1510 · 02/05/2023 18:08

RedTulipsSpring · 02/05/2023 18:00

“Milking the system” do explain?

Show quote history

By feathering your own, personal, pension nest with extraordinary amounts in order to ensure you continue to receive state benefits by 'pretending' your income is much less than it actually should be if you weren't feathering your own nest .....

HTH.

Trez1510 · 02/05/2023 18:12

freyamay74 · 02/05/2023 18:02

This thread has been an eye-opener for me. Very high earners milking the system to feather their own (pension) nests. Possibly the same people who, in future years, will bang-on about 'scroungers' .....

That's my point: a system which encourages people to game it doesn't really work for anyone, high or low earners.

If I'm doing a low paid, perhaps pretty grotty job, and I can find a way of working the minimum hours to get top ups- I'll probably take it.

Equally if I'm working in a high earning high pressured role, and I can find a way of keeping my tax lower so the more of the money I earn is mine- I'll probably take it!

We're all human. We can bang on all we like about the morality of it or the satisfaction and sense of achievement of earning all your money rather than relying on benefits, but at the end of the day, people generally want to feel that the harder/ more they work, or the more responsibility they carry, the more they'll be financially rewarded. Not just in the future but now.

A pp said upthread that the bottom line is, the lowest paying job should leave you with significantly more money than relying on benefits. There should be a tangible difference. I'd add to that: the hours someone puts into that lowest paying job should be proportionate to their net pay. It's bloody ridiculous that someone capable of working a normal 37 hour week doesn't feel the financial rewards are enough of them, and can make the choice to work far fewer and get top ups. It's bonkers.

Perhaps the answer is to bring the cliff-edge much, much closer to the average salary rather than six-figure salaries?

I'd always assumed (as a net contributor - no kids/no benefits) my tax went to support those who genuinely need it to survive. Not people on £100k+ salting a disproportionate amount of their salary away to ensure they still received state benefits funded by me on a far lesser income (retired, now).

Purplecatshopaholic · 02/05/2023 18:15

Sometimes this sort thing happens, eg tax, bens etc impacting on the pay rise, and you end up (usually only a little) worse off for a period. Surely it’s short term pain for long term gain though - in time you go for another promotion, and/or get a higher paid job?

freyamay74 · 02/05/2023 18:18

@Trez1510 Id always assumed my tax went to support people who genuinely need it- not those on mega high incomes, or those who choose to work part time or won't accept promotions that are offered to them because they don't want to lose benefits

freyamay74 · 02/05/2023 18:20

@Purplecatshopaholic I agree - and I can see that from the perspective of a woman in my late 50s. I'll be claiming my occupational pension soon, I've got private pensions too and i can see the reward for taking promotions and working to capacity.

It's harder for people to visualise that reward when they're younger though.

Nordicrain · 02/05/2023 18:23

Gardengirl108 · 02/05/2023 16:36

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

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You lose it gradually. So effectively between 100 and 125k you are taxed at 60% in real terms (40% + the gradual loss of the PA)

Nordicrain · 02/05/2023 18:25

freyamay74 · 02/05/2023 18:18

@Trez1510 Id always assumed my tax went to support people who genuinely need it- not those on mega high incomes, or those who choose to work part time or won't accept promotions that are offered to them because they don't want to lose benefits

Your tax doesn't support "mega high" earners putting more in their pensions. Their own tax does that. It doesn't cost you anything. And it's to inccentivise pension savings to reduce the amount of old people who can't pay their own way/ survive on the state pension. They will also pay tax on their "mega high" pensions. It's not milking the system in the slightest.

AreMyDucksinarow · 02/05/2023 18:28

Sucks doesn’t it?

I’ve lost my child benefit (never have been able to claim other benefits) and now pay ££££ in tax/NI a month…

However if your a good wage earner your not allowed to complain on Mumsnet 🤷‍♀️🤦‍♀️

freyamay74 · 02/05/2023 18:28

@Nordicrain true, I was being a little sarcastic in my response to another poster!

Nordicrain · 02/05/2023 18:29

freyamay74 · 02/05/2023 18:28

@Nordicrain true, I was being a little sarcastic in my response to another poster!

Ah ok, sometimes hard to tell on here 😁

LakieLady · 02/05/2023 18:30

NumberTheory · 02/05/2023 15:29

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).

Even on standard tax/NI, the net gain on additional income for people on UC is only about 30%.

On £100 gross, they lose £12 in NI and £20 in tax, leaving £68. Then 55% of that £68 (£37.40) comes off their UC, leaving them with a net gain of £30.60.

It must feel the same as paying tax at 70%.

One of my friends couldn't afford to go back to work f/t after her mat leave. She was going to be significantly worse off after paying childcare costs, and their income was too high for help with childcare (this was in tax credit days, pre UC).

We worked out that if she went back to work 3 days pw, her income would be below the level at which her student loan repayment threshold, leaving her with proportionately more net pay, and she saved 40% of the childcare costs as well.

Youcancallmeirrelevant · 02/05/2023 18:30

Bucketheadbucketbum · 02/05/2023 15:19

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

I give up

Show quote history

Do people not checl this befote taking a job/promotion? I always use a salary calculator to make sure i know what my extra take home will be to then devide if its worth it

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