Millions are taking action to avoid being punished for working harder
Daily Telegraph 02/01/26
During his 30-year career as a cardiac surgeon, Money reader Alan Edwards** never considered working part-time.
The job was stimulating, the pay was good, and reducing your hours “wasn’t the done thing”.
“I enjoyed it enormously but it was physically extremely demanding,” he says. “You’d go to bed, then get a phone call at 1am, head back to the operating theatre, get back home at 6am, then be back to work at 7:30am or so to do a heart transplant. I don’t know how I did it.”
Edwards’ adult children – who are both doctors themselves and now have children of their own – have chosen a different approach.
The combination of childcare pressures and high income taxes persuaded them to reduce their hours. One works four days a week, the other just three days.
Edwards can see the wisdom of doing so. Decades of well-paid work mean he has accrued a pension pot worth more than £600,000.
But the Chancellor’s decision last year to drag unspent pension wealth into the 40pc death duty net has prompted him to give away £10,000 each month, rather than risk leaving it for the taxman.
“I worked very, very hard for a lifetime as a surgeon and certainly acquired a modest amount of wealth.
“My children see that there’s a likelihood much of [that money] will be confiscated and thus decided not to repeat my mistake. To my mind, going part-time is a waste of their talents, but they rightly say there’s no point in working harder.”
Men are choosing to work less
Today, many highly skilled professionals at the pinnacle of their careers are choosing to work less.
Employees in Britain are working 2.3 fewer hours a week on average than they were at the turn of the century, according to Telegraph analysis of Office for National Statistics (ONS) figures.
This equates to 68 million working hours lost per week, equivalent to 1.7 million full-time workers.
And the decline has been steepest among high-flyers. The average working week of the top 10pc of earners has fallen from 48 hours to 44 hours since 1995.
Bart van Ark, an economist at the University of Manchester and director of The Productivity Institute, says Britain is experiencing a work slump affecting most advanced economies.
There are two major factors influencing this trend. The first is the fallout from Covid, with businesses embracing new models of hybrid work.
“There’s more flexibility, and it’s allowed people to share jobs,” van Ark says. “This has affected how many days and hours they’re working.”
A longer-term trend is also at play: the realignment of full-time and part-time work within households.
While the overall share of employees working part-time has remained at around 25pc over the past 30 years, there has been a sharp increase in men going part-time, doubling from 7pc to 14pc, according to the ONS data.
“Traditionally the male partner would take a full time job, and the female would drop out or go part time when they have kids. Now the work is divided up differently.”
Should we celebrate the shift to fewer hours and days worked? The answer, van Ark says, depends on the reasons a worker goes part-time.
“One sign of a wealthy society is the ability of people to manage their work-life balance better. If you can afford it, for many people reducing their hours will lead to better wellbeing.
“Some people would benefit from going part-time, some people are forced to so they can manage their other responsibilities. Fiscal incentives and disincentives are always playing a role.”
Tax traps
Nowhere are these incentives felt more acutely than at an income of £100,000 a year.
Workers earning between £100,000 and £125,140 lose 62p of the next pound they earn to income tax and National Insurance, because their tax-free personal allowance is gradually withdrawn – a higher amount than the 45p official top rate of tax.
Parents with young children are particularly hard-hit. Childcare perks worth up to £14,500 a year for someone with two children are also lost completely once either parent earns six figures.
The cliff-edge creates a strange incentive for parents earning £99,999 to turn down a pay rise so they can hold on to the government benefit – or reduce their hours.
Both the personal allowance and tax-free childcare thresholds have been frozen at £100,000 since they were introduced in 2010 and 2017, respectively – even as salaries have been pushed up by inflation.
The data suggest that more white-collar workers in high-earning jobs are going part-time. The professions with the largest shift towards part-time work between 2011 and 2025 were media – including PR workers and journalists – with a rise of 9.1pc, chief executives (5.6pc) and health professionals (2.3pc).
It was only in semi-retirement that Edwards chose to work less because of tax. He would sit on Department for Work and Pensions (DWP) tribunal panels that heard appeals against benefit decisions “to keep my brain ticking over”.
But when his combined pension and DWP income hit £100,000, he would turn down extra work.
“There would be frantic calls from the tribunal service saying they can’t find a replacement,” he says. “I would say, ‘Sorry, I’m retired now, and patients’ lives aren’t at risk.’
“I feel guilty saying this now, but that was the reality. I wasn’t going to do it when I’m taxed at over 60pc.”
Productivity problem
Tom Pugh, an economist at tax firm RSM, says people tend to think about earnings in one of two ways: either work as much as they can to maximise pay, or work as little as needed to fund a desired lifestyle.
The £100,000 tax trap can affect both groups, as in some circumstances getting a pay rise can reduce take-home pay and perks.
This is one of the reasons behind Britain’s very low productivity growth, according to Pugh. Productivity is the measure of the average worker’s economic output.
In properly functioning economies, workers should be becoming more productive over time as, for instance, skills improve and technology brings new efficiencies.
Pugh says: “These [six-figure salary] workers are the most productive in society almost by definition. If they reduce the number of hours they work then you will inevitably be reducing productivity in the economy.”
Reeves’s decision to extend the freeze of income tax thresholds for a further three years until 2031 risks cementing the incentives pushing Britain closer to becoming a nation of part-timers, he adds.
The argument that higher taxes distort incentives is nothing new. But the interaction of taxes, regulations and benefits – built up over decades – makes Britain’s tax system particularly dysfunctional.
Simplification is the answer, according to Pugh. “There’s a relatively easy fix. Instead of having these insane thresholds and clawback mechanisms, it would be much simpler to put up the top rate of income tax and simplify the system around the £100,000 mark.
“You could do it in a way that’s revenue-neutral for the Government, and you could smooth out the whole system.”
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