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Pension income plus wages. How to work out how much we will bring home every month. Any links to websites that can answer my question?

(9 Posts)
ihatethecold Sat 19-Aug-17 01:04:58

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?

SerfTerf Sat 19-Aug-17 01:10:08

Yes basically lumped together.

These might help.

TittyGolightly Sat 19-Aug-17 01:12:13

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.

ihatethecold Sat 19-Aug-17 01:31:36

Thanks. That makes sense.

Ellisandra Sat 19-Aug-17 02:23:51

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!

ihatethecold Sat 19-Aug-17 02:51:51

He won't contribute to another pension in his new job.
He has already had a large lump sum from his previous job and has received his first pension payment already.

He will have to join his new employers scheme but will opt out straight away.
He will probably only work for another 7 years.

scaryteacher Sun 20-Aug-17 13:38:46

Ellisandra If he's retired HM Forces on the 75 scheme, then you get your pension and lump sum when you retire (was 53 for dh), and I don't think it can be deferred.

ihatethecold Sun 20-Aug-17 14:05:27

He retired from the police and could have deferred I believe but we decided not too.

FeryOX Tue 24-Oct-17 21:42:27

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

Tax break-down:

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

See here:

I hope it helps.

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