Tax / Pension

[Almost2026]

I’ve recently secured a new role and been offered £53k salary plus up to 10% bonus.

It includes medical cover for me (I am waiting to find out if I can add the family but currently have no cost examples for this making it more tricky).

The company will match up to 8% pension.

I got stung by the higher tax band last year when my bonus tipped me over.

Please can you help me work out how much to put into my pension and any other tips to be most tax efficient. Anything else I need to consider. We need to maximise take home pay still for a while as want to get a mortgage in 6 months. No student loans.

You really need to contact an independent financial advisor. That is probably the only financial advice you should take from MN.

I can’t imagine I earn enough or want to save enough to see a financial advisor.

Do you want to maximise take home, or put what you can into your pension to avoid the higher rate of tax?

The way to maximise take home is to put nothing into your pension for 6 months - this is obviously not the most sensible thing long term. And not add family to the health insurance as I imagine that is a salary sacrifice set up?

I think a balance between the two, get the highest take home pay, without tipping into 40% tax I guess.

Best thing would be to review in March, before the end of the tax year. See what your gross pay to April 5 2026 looks like and then put money into your pension then. Either a self funded pension or employer, if they allow additional contributions.

But ideally you'd be wanting to put aside cash each month until then. In an ISA would be best.

I’ve been playing with the online calculator, I think I need to know how much the medical will be really to finalise. The medical cover is important to us.

Good idea. Will check if you can make additional contributions. It’s always been yes at my previous company until this year they didn’t give the option (mainly due to change of payroll team and them forgetting to give it), people were really upset about it.

Normal top of the basic rate band is £50,270.

if you earn £53,000 you'd have to sacrifice £2,730 into your pension which is £227.50 a month in order not to pay any HR tax. But you're starting this job well into the tax year so you'll have to factor in what you've earned so far (look at the taxable YTD figure on your last payslip or on your P45), and go from there.

As PP have said there's no one right answer because you need to remember that even if you pay HR tax you still get to keep 58p in every £ (40p tax and 2p NI), of each £ over the HR limit. Compared to having £0 in your pocket (at that point) if you'd put it in a pension. So don't let the tax tail wag the dog.

You realise you only pay higher rate tax on any earnings over £50,271? And you pay lower NICs (2%) above that amount instead of 8%? I’m not sure what your worry is about paying a slightly higher overall rate on a small chunk of your earnings.

If you can afford it, it makes financial sense to pay anything over £50,271 into your pension.

But you shouldn’t let the higher rate tax band drive your financial decisions - if you need the money, put enough into your pension to get the maximum employer contribution.

She doesn’t need a financial advisor…!

I’d get your mortgage before you do anything.

Then - just salary sacrifice down to £50k (inc putting your bonus in - if they allow it) to maximise pension match / 40% tax relief.

You don’t need a IFA for this - use online tax calculators using your tax code and salary.

You need to keep your annual income under £50,270 by paying into your pension.

If you have free private medical this will be taxed as a benefit in kind (BIK) and show on your P11d which you should receive annually.

The P11D is a statutory form required by HMRC from all UK based employers detailing the cash equivalents of benefits and expenses that they have provided during the tax year to their employees. HMRC will use the information supplied on this form to assess the taxable benefit charge and amend your tax code accordingly.

You can further avoid tax by asking your employer to pay your bonus tax free into your pension. Again another tax efficient way to keep salary under £50,270.

Also check you don’t have too much interest on savings as that could tip you over the £50,270 unexpectedly. Use cash ISA for savings where interest is tax free.

Ok. It was just a suggestion. I suppose I must be the only person who has ever seen poor advice on Mumsnet.

Why specifically wanting to avoid that tax band? You’re only taxed at the higher rate on the amount over it. Focus on what you want to put into your pension and what you need to be taking home before thinking about that. If you can afford it, I’d put 8% into the pension to max the employer contribution.

I'd always advise to pay the full 8 percent pension as then hour employer will match so 16 percent going into your pension. You can set up a SIPP and then pay in whatever chunk you need in March to keep below limit for April 5th. Government will also top your SIPP up so worth doing.

Most places I have worked the P11D value of family healthcare is about £1000. That might help with your budgeting

Yes I do realise that. Just never really been able to put the max in pension, so just trying to make the best choices.

Good point about it being so far into the tax year as well. Maybe I review it properly in March. I didn’t actually consider this part.

You do not need an IFA for deciding how much to contribute to your workplace pension.

Please can you help me work out how much to put into my pension and any other tips to be most tax efficient. Anything else I need to consider. We need to maximise take home pay still for a while as want to get a mortgage in 6 months. No student loans.
This is the part of the OP I was considering.
Anyway, OP doesn't need to pay any attention to me at all. I am sure she will sort it all out.

How old are you and what pensions do you have to date?
Can the bonus be paid into your pension?

As long as it wasn't going to impact day to day finances I think I would always pay in the maximum that the company would match. Whether you do this now or in 6 months once you have sorted mortgages out is up to you. I got my first "real" job 6 months before we applied for a mortgage and for that short time the money was more useful to me as a deposit rather than in a pension so I only put the 3% that I had to in order to get company to put some in too. As soon as I bought the house I upped it to the 10% matched maximum.

I would run some scenarios through the take home pay calculator and see what the impact will be on take home income for different pension contributions. Work out what you need in take home pay to meet commitments and what you need for a comfortable life? What savings do you have, do you have any looming large expenses - building work, new kitchen, new car etc? You want to ensure you also have some financial resilience to manage life's ups and downs

Thanks everyone. You’ve helped me think that, I can keep as much take home pay until we get the mortgage done.

I won’t get a bonus this tax year due to changing roles so that’s less to tip me over too much this year as well which I hadn’t thought about.

I think I’ll see what I’m coming out with and then review in April / summer when the mortgage is done.

You can top up your pension via salary sacrifice which is tax efficient.

In a full year, you can expect to earn about £56-58k including bonus. Healthcare will be about a £1k benefit in kind (ie you get taxed on that bit).

Once your mortgage renewal is done you’d be nuts not to put 8% in your pension if you possibly can manage to afford it. Assuming your bonus is non pensionable that is 8% of 53,000 = £4,240. If you don’t put it into your pension, you’ll pay 40% tax and 2% NI on that top bit of your income and get £2,459 take home. If you put it into your pension, with the employer match you get £8,480 into your pension - three and a half times as much. When you take your pension 25% is tax free and unless you envisage being a very well off pensioner the rest will be taxed at 20% - so you would get £7,608 net - still more than three times what you’d get if you took the money now. And that’s before even accounting for capital growth in the scheme.

Matched pension contributions from employers combined with tax relief are a huge opportunity that too many people miss

These are the kind of figures I needed someone to help out with. Thank you!