Should I reduce my hours to avoid paying tax ?

[leonardoturtle]

I know this is probably a touchy subject and could cause some conflict.

But at the moment I work 24 hours over 3 days and im not enjoying it. I work until 8-9pm and I don't like not seeing my kids all day.

I'm earning 400-500 a week but self employed so I'm paying around £100 a week tax and NI. Totalling around £4800 a year.

I won't be able to put much towards expenses so won't get anything back.

I'm wondering whether it's worth reducing my hours to have a better home/work life balance and also so that I don't have to pay as much tax?

It doesn't make sense to be working more hours making me exhausted to then just have to give it to the tax man?

I'll get my 30 free hours in soon and won't be paying any childcare which will save me £300 a month.

Am I being unreasonable to do this?

On the figures you have given - you are paying too much tax and NI. You should be paying in the region of £70 per week.

Agree with the above, your deductions are wrong, I make it to be more like £64 per week (based upon an average £450 per week), so I would sort that first of all.

Personally I find it disingenuous to say shall I work less so I pay less tax, in my accountants mind, that is a bit like saying shall I negotiate a lower rate of pay so that I pay less tax.

If you want to reduce hours for work life balance though, that is another matter and a fair question. But hard to answer for anyone else as it would depend upon individual circumstances, do you have other income, a partner, is partner happy with that etc.

Hello, have I calculated wrong?

I did -20% for tax and 4% for NI?

I calculated if I earn on average £21,600 a year, -24% I would pay £5184 tax and NI ?

Am I wrong x

Sorry just realised, I forgot to minus the 12570 tax free allowance haven't I?

There’s never anything wrong with reducing your hours just because you want to . As long as tha
t doesn’t result in you claiming benefits to top you up when you could have just worked ft like lots of people have to (who also want to see their kids)

It's funny, you are the first person I've heard who is prepared to earn less money in order to pay less tax. I applaud you for that. Most people want to earn the same, or more, and pay less tax.

Personally, I have always aspired to pay a million pounds a year in tax 😉

Seriously though, I agree with the above, I think you have calculated incorrectly. Especially if you are self employed as that is more tax efficient than PAYE. I would be surprised if reducing your income to pay less tax was a significant benefit to you. Because tax is banded, you are always better of earning more than earning less even though you pay more tax.

Any other quality of life issue is a different argument though, and one you have to decide. Ultimately, we all exchange time for money, and only you can decide how much time you wish to exchange for how much money.

Surely the tax is irrelevant, what matters is how much you take home isn't it?

If you can manage in less money then cut your hours, I'm not sure exactly what youre asking

I won't be able to put much towards expenses so won't get anything back

are you sure about this? Do you have an accountant who has actually looked and advised this?

You could put some of your earnings into a pension so you wouldn’t pay tax on that amount and you would be building your pension pot for the future.

You'd rather have 100% of nothing than 80% of something? As self employed you can work what hours you want and if you feel you'd benefit from reduced hours, do it. But cutting your own money just to not pay tax is cutting off your own nose to spite your face.

Yep it looks like you've forgotten your personal allowance but if you're self employed aren't you doing a tax return?

Or if you're PAYE but see employed then surely your payroll software will do the deduction?

I would also suggest you pay more into pension if you want to pay less tax. If you want to reduce hours because you want a better work / life balance, that is a different question.

But at the moment I work 24 hours over 3 days and im not enjoying it. I work until 8-9pm
One of the perks of being self-employed is setting your own hours. Why aren't you doing more family-friendly hours?