To think there was no point in my getting this promotion? Tax related

[justfoundout2014]

I am no doubt being utterly ridiculous, and this is not entirely unexpected, but having just had my first payslip following a promotion, I am taken aback by how little difference it has made. The pay increase was between £5000-6000 and that translates to £100 per month. I have paid £40-£60 a month more NI, tax and pension.

AIBU to think it was hardly worth it? My new role has considerable more responsibility, meaning more work to be done at home and therefore less time leftover, and for very little increase. Of course the extra money is great, but is not really going to make a huge difference, especially when compared to the difference in workload.

What is really depressing is that this is as good as it gets - there will be no point in my going for any more promotions, or even the next level of the pay scale, as I would lose my CB, making me worse off . As a newly single parent, this seems grossly unfair and a little sickening.

I know I am vey lucky compared to some, but I do a professional job with a serious level of responsibility attached, and it is now clear that I am going to have to spend the rest of my life, well, not struggling, but 'watching the pennies', not going abroad, having to say 'no' a lot to the dc etc

Anyway, a very self-pitying post, but seeing it in black and white today has given me a jolt.

How is a £5k payrise £100 a month?

That can't be right?

Your figures don't make sense. £5000 annual is £416 per month. So if you are paying the extra tax you say, then you should be better off by more than £100.

That's an extra £500 a month - you can't be paying 80% tax on the extra.Have you checked your tax code? Do you get a company car now or something that you are being taxed on?

If your salary has increased by £5 - £6,000 pa then that translates to £416 - £500 per month (gross).

Maybe the op meant the increase was weekly?
A €100 per month would make a huge difference to me. Huge.

A £6k Pay rise would give you an extra £500 per month before tax, so at least £300 after tax. Shouldn't it?

Roughly every 1k extra a yr gives £50 pcm in your pocket - I'd check your tax codes and when the pay rise has been applied from.

No perks, but you have given me hope that I should check my tax code. The last promotion I had was barely noticeable, though it was not such a significant rise, so I was half expecting to be disappointed. In addition, I remember last year my HoD telling me not to go for the promotion just for the money, as when she got a similar rise, it barely made a difference. I will look into it.

Your tax code must be wrong - assuming you are already a higher rate tax payer and aren't making more than 5% pension contributions, you should be getting at least £250 in your hand a month extra on a 6k raise - possibly more if you are in a salary sacrifice pension scheme.

Or someone's fucked up the payroll.

poster ThirdPoliceman Fri 19-Sep-14 21:06:23
Maybe the op meant the increase was weekly?

Erm, no, I don't think that's what the op meant as she says this in the op: "The pay increase was between £5000-6000 and that translates to £100 per month"

has it tipped you over £40k so you're now being rinsed by the higher rate tax code?

Yes, definitely check your tax code. I would speak to pay roll and then call hmrc. I don't really understand how the new monthly system works but it might be assuming you have earnt the new salary all year and therefore haven't paid enough tax. Definitely check.

Looking at it logically, higher rate tax is at 40%, NI at higher rate threshold is 2%, and whatever percent your pension contribution is, say 5%, on £500 a month that means 500 less pension contribution of 50 equals 450, then tax and NI of 42% gives you 189 (assuming salary sacrifice but shouldn't make a huge difference) so that'll be 450-189 = 261.

Very rough back off the fag packet figures, but way off what you're getting.

And that's assuming your previous salary utilised your basic rate band and personal allowance, so you were on more than forty k to start with.

www.moneysavingexpert.com/tax-calculator/

you can work out the difference...

If you havent lost your CB already you're presumably a basic rate tax payer. On a pay increase of £6k you should have paid roughly £50 more in NI and £100 more tax. You should therefore have come out with £300-350 more.

If you are a teacher the huge pension payments will swallow most of it. I earned 6k more than my dh but took home only £150 extra a month after tax and pension. Made me question if it were worth it. (It wasn't, I quit.)

If you havent lost your CB already you're presumably a basic rate tax payer.

Not necessarily, basic rate band is up to 40k ish, child benefit abatement starts at 50k and is lost entirely at 60k

I recently had an increase of approx £7000 and it does not seem to have made that much difference to my take home... Thinking I also need to check my tax code!

I do hope you're not an accountant.

Yes honeysuckle, I am a teacher, and I fear you may be right. No dh though now, so no option to quit. Anyway, I love the job, but I am wondering about the extra work and time for very little pay increase.

That's the trouble. Its a vocation but hard took have your own life too! I wonder if you can temporarily suspend your membership to the pension scheme? Not that its a good long term idea. I feel for you, I really do.

I know other people have said this but...

£6,000 per annum = £500 per month increase.

Even if you are at the 40% band already thats tax of £200, NI is capped at 2% after the upper earnings limit so thats another £10 deduction = net pay increase £290 per month.

I assume your pension isn't any more than say 10%, so you should be getting net £240'ish per month.

And you do get a payslip where you can check all those figures.

I'm kinda hoping you're not a maths or economics teacher!