Is it worth working 3 days on minimum wage

reck_uk

Hi,

We have just had our first child and my partner is considering going back to work part time. The position she has been offered is working 8 hours a day on 2 or 3 days. She will be on the minimum wage.

What I'm trying to work out is if it's worth her working 3 days instead of 2 from a tax point of view.

This is what I've been working out but I'm not sure if I have my figures correct.

As far as I can work out the minimum wage at the moment is £5.73 per hour.

Therefore working 8 hours a day she would get £45.84 per day.

So working 2 days a week she would get £91.68 a week or £4400.64 a year.
Working 3 days week she would get £137.52 a week or £6600.96 a year.

Now this is the bit I'm not sure about.

I've read that you don't start paying tax until you start earning over £6035 a year. So if she worked two days she wouldn't have to pay tax but working 3 days she would, but how does this work? Does she have to pay tax on the full amount once she passes the £6035 mark or just the amount over £6035?

If I have my figures correct she would receive £5280 if the full amount was taxed and £6487 if just the difference was taxed (£565.96 (£6600.96-£6035)).

Can someone confirm this for me or correct me if I'm wrong please. We just want to see if it's worth her time to work that extra day or not. If working that 3rd day is mostly going to go on tax she won't bother.

Thanks

helenshappyhens

Hi
I obviously dont know your earnings etc but If you have got to pay for childcare while she's at work then If she works at least 16hours and you are too, you will be able to get the childcare element of working tax credit which is quite alot of the childcare paid. Its done on total family earnings and when I was earning 128 a week and my hubby was on 18000/year we received a credit of about 60.00 or more a week.

helenshappyhens

Also remember that If she earns over the threshold for NI credits etc If shes ever sick or unemployed she would get government payment whereas under she'd get nothing apart from Income support as a family claim. Remember Tax unlike Ni is only on the amount above the freepay amount. When I earnt £128 I think tax was minimal really.


I made sure that I earnt enough to pay NI etc and now a few years down the line I'm sitting here in pain from MS and unable to work for the last 30 months. But without the worry of nothing coming in because I did pay a little NI.
So yes I think It would be worth her while working 3 especially If you are going to have to have childcare to pay for.

CLAPTON

she pays tax only on the ammount over 6035 .. so here she would pay pay on 565 at 20% i.e. she would pay £113 per annum or 9.41 per week


also remember she will pay NI on earnings over 105 per week at 11%

so on the three day week at 137 per week she would pay
137-105 = 22 x 11% i.e. £2.42 per week

so in total, her extra day adds £45.84 grosss and £34 after tax and NI

vsandz

I'm not an accountant or anything but know a little bit about this tax malarky and shall try to help you as best I can mate ..

I can see that you have calculated your annual earnings based on 48 weeks per year. I am assuming you have simply taken 12 x 4 (months x weeks per month). I think the calcs would be more accurate if you instead take the full 52 weeks there are in a year.

reck_uk wrote: »

So working 2 days a week she would get £91.68 a week or £4400.64 a year.
Working 3 days week she would get £137.52 a week or £6600.96 a year.

So if we take these figures and convert to 52 week year then we get
2 days/week = £ 4767.36 / year
3 days/week = £ 7151.04 / year

reck_uk wrote: »

I've read that you don't start paying tax until you start earning over £6035 a year.

This is correct.

reck_uk wrote: »

Does she have to pay tax on the full amount once she passes the £6035 mark or just the amount over £6035?

If I have my figures correct she would receive £5280 if the full amount was taxed and £6487 if just the difference was taxed (£565.96 (£6600.96-£6035)).

Tax is only payable for the amount over the annual allowance. i.e. only the difference amount over £6035 would be taxed.

One other thing I notice is that you have not taken National Insurance into account mate.

I would suggest you visit this website:
https://www.listentotaxman.com
You will find a tax calculator here. Simply put in the weekly amount and it will do the math for you. Hope this helps.

reck_uk

Wow thanks guys. This thread has been very very helpful, thanks to all that replied. I never considered the NI contribution issue either. Anyway things are a lot more clearer and we can now make a decision.