What you need to know if you go part time after having children

Becoming a parent is one of life’s most thrilling experiences. It’s a time filled with joy, but it often brings new challenges, like finding the right balance between your professional life and your growing family. For many, the solution lies in transitioning from full-time to part-time work. This change allows for more family time while keeping a connection to your career.

A move to part-time work means your income will likely decrease, but it’s important to remember that childcare costs can add to your expenses. The silver lining? You often have enough notice to prepare and adjust your financial plan accordingly. In this article we explore some ways you can begin to plan for a transition to part-time working.

Child benefit

Child benefit is a helping hand for those raising children under 16, or under 20 if they are in approved education.

You can claim child benefit if you contribute the equivalent weekly amount towards their care. That means paying for things like clothes, food, pocket money or birthday gifts. However, if you or your partner earn more than £60,000, you might have to repay some or all of the benefit.

If two people share responsibility for the same child, only one can receive the payments. You can personally choose who receives this payment otherwise HM Revenue & Customs will make the decision.

You can claim £25.60 per week for your eldest or only child, and £16.95 for each additional child. These benefits are usually paid every four weeks.

But you need to report any changes, such as a shift to part-time work, to the child benefit office to ensure you receive the correct amount. Registration offers other advantages even if this office does not consider you eligible for the full amount of child benefit because one of you earns more than £60,000. Registration enables a non-earning parent (or one who earns less than £6,396 a year) to obtain national insurance credits that can, for example, help build up your state pension.

Part-time work and employee benefits

When you move to part-time work, it’s essential to understand how this affects your employee benefits. These can include health insurance, life insurance and pension plans. Since policies vary across companies, it’s wise to discuss with your employer how your part-time status will impact your benefits.

Even with part-time earnings, you maintain full access to your tax-efficient Individual Savings Account (ISA) allowance. This can be a strategic way to supplement your pension contributions.

Pension considerations

If your part-time salary falls below £10,000, you won’t be automatically enrolled in your workplace pension scheme. However, you can still opt-in. Although your contributions will be lower, it’s a vital step for your financial future.

Your state pension depends on your national insurance contributions, requiring at least 35 years of payments to qualify for the full amount. By claiming child benefit, you’ll receive national insurance credits until your youngest child turns 12, which helps safeguard your state pension eligibility. But you won’t receive national insurance credits if you earn £6,396 or more a year.

Employers often provide various benefits, such as death in service, health and dental coverage, life insurance and critical illness cover as well as retirement plans. When you switch to part-time work, your eligibility for these benefits may be reduced or lost completely. Therefore, it’s important that you check with your employer and gather all the details you can as to how a shift to part-time employment may affect your benefits. You may even want to consider how personal protection, perhaps in the form of income cover or critical illness insurance, could enhance your benefits and further protect your family.

If you are in a relationship and considering moving to part-time work or changing your work schedule, it is important that, as a couple, you review each of your workplace benefits and determine the best way to arrange them to ensure you maximise your employee benefits.

How can SPW help?

Whether you are planning to continue working part-time after having children or choose to work part-time before transitioning back to full-time, each choice carries financial planning implications.

However, this does not mean you have to compromise your financial wellbeing to have children. The first step when preparing for reduced income and increased outgoings is to prioritise what matters most to you, ensuring you can effectively manage your cash flow.

Priorities vary for each individual, therefore, at SPW, we can provide customised and personalised advice to address the unique needs of your situation.