We will have 2100k per month from my dh's pension, he has just got a new job that will pay 55k per year. Looking online it's not easy to find out about how much tax will be paid and if both salary and pension will be taxed. I know they will both be taxed, what I mean is will they be lumped together for the sake of taxes? Thanks
There are lots of websites that explain how this works (if you're in the U.K.).
He can either apply his tax code to one income and pay 20% on the other (making up the 40% bit via self assessment) or have his code split across the 2 employments and his tax should then be right on a monthly basis.
Not what you asked, but does he actually need to take the £2100 pension yet? When he goes into draw down on that pension, it seriously limits the amount he can contribute annually to another pension. A £55K a year job is a good salary therefore possibly is with a company that will make a company contribution to a pension. Also, at £55K he has the potential for 40% tax relief on some contributions.
Do the maths and check the legislation before going into drawdown!
You will have to add the 2 sums together, and then calculate the income tax on the total sum. I've done some calculations for you below.
Contrary to what many people think, the state pension is not tax-free, but the money you receive is paid 'gross' - without any tax being deducted. If your total income from all sources, including the state pension, is greater than your tax-free allowance, tax is due on your state pension and this will normally be deducted from any private pension or earnings you might have, which are paid through the PAYE system.
So here are your calculations:
£2100 a month from pension is £25200 a year
Your husband's £55K + £25200 = £80200 gross earnings a year.
If you run a tax calculation on this, this is what you'll get:
Take home (net): £4,524 every month
You'll pay no tax on the first £11,500 that you're earning. You'll pay £6,700 tax on £33,500 (at 20%) You'll pay £14,080 tax on £35,200 (at 40%) Total tax paid: £20,780