Workers with children who earn just under £50,000, the threshold at which the benefit starts being taken away, would be better off turning down extra work because much of it would simply be clawed back by the Government.
This means that overtime would be a “waste of time”, according to Steve Wade, a director in the tax and pensions division of accountants KPMG.
From January, any household where one person earns more than £60,000 will lose its entitlement to full child benefit. Households where one person earns between £50,000 and £60,000 will lose some of the benefit, depending on how much they earn.
While what he says is true I\’m not all that sure how important it is.
How many people on c. £50k a year get paid hourly and thus qualify for possible overtime payments?
I\’d have thought that pretty much everyone at that level was on a salary and thus not really affected.
Anyone know the numbers?
Lawyers?
Some building trades. Lots of IT contractors. Many of the more successful sole traders …
I have had a couple of salaried jobs where out-of-hours or on-call got you overtime, whereas the main job running over was just your hard luck. But I appreciate those weren’t ‘normal’.
Incentive to work for bonuses, also.
But faced with those insane marginal deduction rates you can still opt to keep (defer) 100% of your marginal earnings by increasing your pension contributions, because the HMRC test is after pension, gift aid deductions.
http://www.hmrc.gov.uk/budget2012/tiin-0620.htm
In Luxembourg, they apparently give you tax allowances for children, rather than benefits. This means that the incentive to reproduce is better for higher earners and does not result in flocks of feral children.
My last salaried post didn’t offer overtime as a matter of course; but if there was a particular business need then approved overtime could be payable. Since it was paid at 1.5x rate, they were keen for staff to take time off in lieu instead. Actual paid overtime was rare as hens teeth.
Police sergeants are on £35,610 – £40,020 apparently. Then there’s Londeon weighting of up to £6,501 plus other payments available. Hypothetically this could take them close enough to £50k to consider turning down the overtime that they can also be eligible for.
“Major investigation compromised by child benefit” Looks like a headline waiting to be written.
Lots of people in IT support roles I expect. On a salary for their day job but if they get a 3am phone call for a server problem they’ll be on overtime.
State benefits for people on £60k?!!
Child benefit, Rob. Which was, until recently, universal and non-means tested.
“How many people on c. £50k a year get paid hourly and thus qualify for possible overtime payments?”
For a forty hour week, that works out to about £25 per hour. That’s not an unusual sum to earn as an hourly rate these days. Almost all self-employed professionals, skilled tradesmen, and so-on charge more than that for their time.
Tim adds: None of these people get overtime though. Clue’s in the “self-employed” bit.
“None of these people get overtime though.”
Not overtime, as such. Just more hours of work.
Some London Underground roles. The highest station supervisor grade is around or closely approaching that, and they can work some overtime. Train Operators are a bit under £50k (and Instructor Operators are even closer to it), and while they can’t do voluntary overtime, they do get involuntary – ie, if stuck on a train behind a suicide/signal failure/whatever causing them to go over their time, that’s paid. There’s also a bonus for working overnight New Year’s Eve.