Reduce your hours but not your salary - ish

HedgehogRulez

Imagine if you had just increased your pension contributions instead….

WindfallWendy

HedgehogRulez said:

Imagine if you had just increased your pension contributions instead….

No, I looked into that and with my current provider it wouldn't have been worth it. I AM still considering a SIPP but for now, this is a far more enjoyable way to avoid 40% tax ☺️

Hoenir

WindfallWendy said:

HedgehogRulez said:

Imagine if you had just increased your pension contributions instead….

No, I looked into that and with my current provider it wouldn't have been worth it. I AM still considering a SIPP but for now, this is a far more enjoyable way to avoid 40% tax ☺️

Never let the tail wag the dog.......

EdSwippet

Hoenir said:

WindfallWendy said:

HedgehogRulez said:

Imagine if you had just increased your pension contributions instead….

No, I looked into that and with my current provider it wouldn't have been worth it. I AM still considering a SIPP but for now, this is a far more enjoyable way to avoid 40% tax ☺️

Never let the tail wag the dog.......

What dog breed is composed 40% or more of nothing but tail?

(See also: thought-terminating cliche.)

jingle123

Thanks for sharing! I’ve seen a few people surprised (in a good way) by how take-home doesn’t drop as much as expected when going part-time, especially if it pulls you below the higher tax threshold. I have been using an online Pro Rata Salary Calculator to see how adjusted salary and take-home change at different FTE levels, and factors in tax, NI, pension. Feels like more people would take the leap if they saw numbers like yours.

Nybster

I have been pondering going part time. Onlynisssue I have is I’m sure my employer would expect the same output and would charge customers as if I was employed fully, so I’d be more stressed and they’d be making more profit!

I guess it depends on what job you do and whether it it time based or fixed price. 

WindfallWendy

jingle123 said:

Thanks for sharing! I’ve seen a few people surprised (in a good way) by how take-home doesn’t drop as much as expected when going part-time, especially if it pulls you below the higher tax threshold. I have been using an online Pro Rata Salary Calculator to see how adjusted salary and take-home change at different FTE levels, and factors in tax, NI, pension. Feels like more people would take the leap if they saw numbers like yours.

I think the issues raised do flag the things people need to bear in mind, particularly the employer pension contributions issue. 

When I changed my hours in a previous job, it co-incided with a change in the pensions policy, reducing how much the staff contribution they took so even less proportional reduction. And then there was a backdated pay rise!! So I've been incredibly fortunate with my timings as well as being perfectly fine that my pension is determined by a slightly lower salary level.

WindfallWendy

Nybster said:

I have been pondering going part time. Onlynisssue I have is I’m sure my employer would expect the same output and would charge customers as if I was employed fully, so I’d be more stressed and they’d be making more profit!

I guess it depends on what job you do and whether it it time based or fixed price. 

Yes - part of the business case has to acknowledge how work would continue. I've found that a bit less time in the office each week, just reduces my propensity to hover on tasks and actually I find myself being more decisive and less distracted because I haven't got the same mindset now I'm not in the office all day, every day, all week. 

Again, maybe not something everyone can make work for them, but it definitely has helped me flip a switch somewhere.

jingle123

Sorry forgot to link the pro rata salary tool I used: https://salarycalculate.com/tools/uk/england/pro-rata-salary-calculator