A pay cut to reduce tax burden

[derek2011]

Is it legal - and if so what are potential additional problems - to ask for a pay cut in order to stay in a lower tax band ? I appreciate that this may read as morally wrong but the likely change will have a serious effect on my family's well being and I feel that I should consider all possibilities in reviewing my situation in trying times

 

[orka]

What is morally wrong about asking for/taking a paycut?

Assuming this is a serious question....

The way the Irish tax system is set up, any reduction in pay will reduce takehome pay. Any increase in pay can only increase your takehome (unless your query is about how pay and benefits affect each other - but you've just asked about tax).

Going on to a higher tax band will only apply for any amounts above the threshold for the band - all pay does not suddenly get taxed at the higher level. EG if the first 20K is at 20% and then it's 40% above 20K, if you earn 21K, you pay 20K @ 20% and 1K at 40% (total 4,400 leaving you with net 16,600). Reducing your pay to 20K will mean you pay no tax at 40% but your takehome is also reduced (your tax is now 20K @ 20% = 4K so net is 16K).

 

[partnership]

Why not ask for reduced hours instead then in the future if your circumstances changed you could always up the hours it is unlikely they would increase your salary again once it is cut. Also if the job is in an area where there are other people of the same grade ont he same pay it may cause them difficulties by fiving the employer the idea that it is ok and acceptable to cut pay. If tax wasnt the issue and the employer came to you looking for you to reduce your wages how would you feel? It is a drastic step and I would advise waiting until you see what the new gov brings.