9 LESSONS ON WORK AND MONEY
From pay rises to pensions, our finance team answer some of your most common questions
1 WHAT’S THE BEST WAY TO ASK FOR A PAY RISE?
Arrange a meeting with your line manager, flagging up what you want to discuss. Your success could depend on getting them on board, and they are likely to have a better idea of the company’s pay structure. Come prepared: list achievements above and beyond the job description and mention how you’ve contributed to the company’s key goals. Think laterally – if you’ve been told a pay rise is not an option, there may be other benefits you could negotiate for, such as flexible working or extra holiday. Don’t threaten to leave unless you mean it and have an exit plan. Making a positive case about how you add value is more powerful than an empty threat. Follow up with an email, putting in writing everything you discussed.
2 IS IT WORTH GETTING A WORKPLACE PENSION?
Yes. If you’re earning at least £10,000 a year, your employer must auto-enrol you into a workplace pension scheme. Take advantage of this, as your employer will also pay in a percentage of your salary and you’ll get tax relief, too (for every £100 in your pension pot, you will have paid £80 and the Government £20). The minimum contribution into a workplace pension by law is 5% – at least 2% must come from your employer. From 6th April 2019, the minimum contribution will be 8%, with at least 3% from employers. Many companies will offer to match your contributions up to a certain amount if you pay more in. If you can take advantage of this, it’s worth it.
3 AS A FREELANCER, WHAT ARE MY PENSION OPTIONS?
If you’re self-employed, auto-enrolment won’t apply, so prioritise starting your own pension savings. One option is a stakeholder pension, which is flexible, so you can stop and start payments. Or you could put money into self-invested personal pensions (SIPPS), which allow you to control the investments that make up your fund. You’ll get tax relief on both. Start your research at moneyadviceservice.org.uk.
4 WHAT CHILDCARE BENEFITS AM I ENTITLED TO AT WORK?
From this October, childcare vouchers will be replaced by the new Tax-free Childcare scheme. Under this, the Government will contribute 20p for every 80p that parents spend on childcare – up to £2,000 a year per child. Existing voucher users are able to continue using them, so if you already get them, it’s worth finding out now which scheme would save you the most. Visit gov.uk/childcare-calculator.
5 I HAVE FOUND OUT MY MALE COLLEAGUE EARNS MORE THAN ME FOR DOING THE SAME JOB – WHAT CAN I DO?
The recent revelations about BBC salaries and gender pay gap reporting have highlighted how common this is. ‘If your male counterpart is earning more for doing the same job role, your company is most likely in breach of
the Equal Pay Act,’ says Stephen Warnham, jobs expert at totaljobs.com. ‘We recommend women tackle these issues head on by organising a face-to-face meeting with their boss or senior management. Go into this meeting with your own notes – a record of achievements and skills you’ve learnt – so you can discuss your performance and achieve a more desirable result. In regard to the gender pay gap, which is different to equal pay, the most effective way to handle this is to ask the question directly. This will identify the “why” behind the pay imbalance and what your employer is doing to address it.’
6 IS IT OKAY TO ASK ABOUT PAY WHEN APPLYING FOR A JOB?
For women to earn what they deserve, we need a more honest conversation about pay, so don’t be afraid to ask about the salary in an interview. And knowing a number will make it easier to negotiate if you are offered the job.
7 WHAT SHOULD I DO IF MY BOSS PROMISES ME A PAY RISE BUT DOESN’T FOLLOW THROUGH?
‘Having an open conversation with them is the best way to revisit this,’ Warnham says. ‘Transparent dialogue will ensure your boss is aware of your desire for career progression. Use measuring tools, such as the salary checker on totaljobs.com, to add weight to your argument.’ Take notes and keep a record.
8 IF I FREELANCE AS WELL AS HAVING A FULL-TIME JOB, WILL I GET TAXED ON MY EXTRA EARNINGS?
Any earnings that exceed your personal allowance of £11,850, through both your employed income and self-employed profits, are taxable, and you’ll need to pay National Insurance contributions, too. ‘It’s how much you earn that matters to HMRC, not where it comes from,’ says Andrew Johnson, policy expert at the Money Advice Service. ‘And when you freelance or are selfemployed, you’re responsible for paying.’ Keep on top of your records in order to correctly declare your earnings through a self-assessment form. If you don’t, you could get hit with a big tax bill and be charged interest and penalties. Go to gov.uk/ self-assessment-tax-returns for more.
9 WILL TAKING TIME OFF TO CARE FOR CHILDREN AFFECT MY PENSION?
You only get the full state pension if you have 35 years’ National Insurance contributions (NICS), and taking time off work can leave gaps. You may be able to top these up with credits. Visit gov.uk/ national-insurance-credits/eligibility to see what you could get. If you are not eligible, you can boost your state pension with voluntary NICS. If you can afford it, it’s worth it. Visit gov. uk/voluntary-national-insurancecontributions to find out more.