Reducing Hours At Work

[Ric.ror]

I currently work 25 hours which takes me into the tax band.
What would be the pros and cons of reducing my hours to below the tax band

[Maydup]

You only pay tax on the amount over the tax band, so you would have to decide how much over you are going and how much you would lose by reducing your hours. Clearly if you are paid £7 per hour the implication is different to the person who is paid £20 per hour.

being paid much that us and how many hours you work at what equates to the lowere

[Maydup]

Ooops lost the thread in the second paragraph there and pressed submit early!

If the difference isn't much you might cnsider putting more into your pension if you have one as its tax free.

[Ric.ror]

Thank you for your help
I hope to add a supplementary question to this tomorrow

[tamborine]

£153pw is tax free. Above that is tax & NI deduction @ 33%. Cant say how it helps you without knowing more?

[factor-fiction]

If working family tax credit is relevant you may need to take account of that too

[BlackadderV]

There are no pros (apart from having more leisure time) and one con, viz your income will be less. I have never understood some people's attitude whereby they think that by paying tax they will be worse off. True, you will pay 20% of whatever extra you earn, but you get to keep 80% (I have ignored NI).

[New Judge]

The current income tax threshold is £10,000 pa (£832 per calendar month, £192 per week). Income above this is taxed at 20% (we’ll ignore the higher rates for the purpose of this question). However, the threshold for National Insurance is currently £7,956 pa (£663 per calendar month, £153 per week). Above this amount you pay 12%.

If you are paying income tax on 25 hours work you must be earning in excess of £7.92 per hour. Your minimum of £192 per week (which takes you into income tax) means you are paying NI of at least £39 per week (at 12% this is £4.48pw).

It is a simple matter to construct a spreadsheet to show you how much your income will be affected by these deductions and how it will vary if you change your hours. However you should also realise that if you are eligible for Working Tax Credits or Child Tax Credits these will also be affected by reducing your hours. You can find calculators online to help you with this though Working Tax Credit should not be effected because you have to work 30 hours per week to get that.

[Ric.ror]

Right here is more information - My current hourly rate is £8.80 per hour and I work 25 hours. I am 50 so I have no dependent children but I would like to decrease my hours as I have an elderly mother - she is 87. I could claim for carers allowance as she is in receipt of attendance allowance (I think its in the region of approx £70 per week - can't remember off the top of my head)

[New Judge]

Looking solely at your income and using next year’s allowances (which begin on 6th April), your 25 hours earn you £220 per week gross. On this you should pay £3.23 income tax and £7.80 NI leaving you with £208.97. The figures below show by how much you will be worse off by reducing your hours.

24 hrs - £5.98 a week worse off
23 hrs - £12.25
22 hrs - £20.00
21 hrs - £27.74
20 hrs - £35.48
19 hrs - £43.23
18 hrs - £50.98
17 hrs - £59.37
16 hrs - £68.17

At this stage you will be paying no income tax or National Insurance and for each hour you further reduce your work you will lose the full gross payment of £8.80.

I have assumed you are eligible for just the normal personal allowance for income tax.

[Ric.ror]

Thank you NJ
So, even if I was to reduce my hours to 16 per week I would still be earning too much to apply for carers allowance?

[New Judge]

Seems not, ric. Your sixteen hours will earn you £140.80 and no tax or NI would be payable on this sum. The Carers’ Cost threshold is £102 per week.

Just a thought: my calculations are based on the assumption that you are paid for 52 weeks a year. If you are not your average weekly income over a year will obviously be less than the £140.80. To get you down to £102 you would have to be paid for 37 weeks a year or less.

[Ric.ror]

Thank you NJ
One more thing - I think
If I was to reduce to 18 hours say and was under the tax and NI contributions threshold what about my state pension when I hit retirement age

[BlackadderV]

My advice would be; take a day trip to Calais, come back and claim asylum. Problem sorted, plus they'll give you a new pair of trainers and a mobile phone, courtesy of your host. the British taxpayer. When you feel up to it, invite your granny and your uncles and their sisters and their cousins. "In my father's house are many mansions, sayeth the Lord."

[BlackadderV]

No, just ever so slightly cynical.

[vetuste_ennemi]

I think it's called social housing (rather than mansions) in the new version of the NT.

[BlackadderV]

That's where I've gone wrong. Must update my version. So, it wasn't fish and sarnies that the Lord handed out, rather Fish U Like a la Galilee.

[Ric.ror]

I've missed the two answers that were removed but would be interested to know the general tenure of the remarks