One in six workers turn down pay rises due to tax concerns – Standard Life

One in six (16%) workers have hesitated or turned down a pay rise, bonus or promotion due to worries about tax and lost allowances, according to research from Standard Life.

Over a fifth (21%) said they would consider refusing a pay rise if it meant paying a higher rate of income tax, while 7% said the same about losing other support or allowances.

Younger workers were more cautious, with 28% of Gen Z hesitating or refusing a pay increase, compared to 19% of Millennials, 10% of Gen X and 3% of Baby Boomers. 

Parents with children under 18 were also more likely to hesitate, at 22% compared with 14% of non-parents. 

Almost one in 10 parents (9%) said losing childcare support could make them turn down a pay rise, compared to 4% of non-parents.

Less than half (48%) were aware pension contributions can help reduce income tax. 37% did not know and 15% believed it was false. 

After this was explained, more than half (56%) said they would consider increasing pension contributions if it meant keeping more of a pay rise or bonus, rising to 63% of Gen Z workers.

Five years after the tax threshold freeze, Standard Life analysis showed the Personal Allowance would stand at £16,072 in 2026/27 if it had kept pace with inflation, £3,502 above its current level.