Money and Calculations

[mrsspagbol]

Hi all, i am a first time mum of a 9 nearly 10 month old DD. I originally had no plans of returning to work but a fixed term opportunity has come up and I feel it is foolish to dismiss it out of hand.

The decision I need to make is quite time pressured. At the moment what I am struggling with is the financial side of things. I am trying to figure out if what I have been offered is actually viable, and also I am a bit paranoid about my financial calcs on so little sleep.

Please may anyone help me? This is also my first experience of part time work and pro rating etc.

Please may you advise how to gross up income etc, for tax and NI so that I can work out what my "bottom line" should be? Also how to pro rate for a 4 day week

Probably very basic questions but I've tried to do it but just want to be sure before I start negotiations

I think you might need to post some more info about the salary before people can help you.

Other than that, have you looked at any online financial tools, I'm sure there must be some that will calculate NI & tax. Also will you need to pay pension contribution ?

I'll show you how I calculated mine, it might help;

FT salary = 33,255
FT hours - 35/week
Suggested hours 30/week (reduced lunch by 30 minutes)
30 divided by 35 = 0.8571 multiplied by salary = 28,503

If you use this website and play around with your figures, it will tell you your take home pay quite accurately.

Also, childcare vouchers save you some money but keep in mind that it reduces your pension contributions. We both take the full allowance of 243, although there is the new scheme coming in but I'm not sure how it works I'm afraid.

www.listentotaxman.com/

It is hard to advise without further information. How long are you expecting to work in the current tax year (until 5th April 2015) ? If you have no other sources of income in the current tax year, you will probably be entitled to tax free income of £10,000. If you earn no more than this over the next 11 months you will probably not have any tax to pay at all. Any amount over the £10,000 will be subject to tax at 20%, so if, say, you were to earn £15,000 you would pay tax of £1,000.

It may be that you will be paid on a PAYE basis which means that tax will be deducted on a weekly or monthly basis, and you will be entitled to a repayment after April 5th 2015.

There are online tools to help you work out NI contributions.

If you give us some more information about the amount you expect to earn monthly, it may be possible to be more helpful.

I can't claim any link to them, or that they're 100% accurate, but if you google "UK tax calculator" there's a couple of websites you can punch your figures into and it'll work it out for you. Some I've used have a pro-rata calculator.

It works out tax and NI from a gross "salary", you can throw in pension contributions and childcare vouchers, input your tax code if known, etc

Pro-rate for four days a week - roughly and assuming all else was equal, all figures would be 4/5 or 80% of the full-time figures. But, keep an eye on anything you need to pay "full cost" when checking something is viable, e.g. You wouldn't use a full week's bus pass if only travelling 4 days, so do you pay for four daily tickets, or maybe a full week's is still the most economical option

Good luck!

Thank you so much for all the replies! I will come back with some draft figures

Hello all

Thanks so much for all your help thus far.

Sorry if I was not clear, what I was trying to figure out is this:

Say I've been offered 40k annually. Prorate this by 80% to account for working 4 day a week right?

Then how do I calculate how much I'd have left after tax and NI (roughly)? What % do I apply? No other income from any other sources.

Let's say my monthly expenses for getting to work are £1500 ie childcare, travel, station parking, food - what does that leave me with (assuming those are my only expenses?).

For 40k, if you are working 80% of full time, this equates to 32k, 10k is tax and NI free, therefore;

833.33 per month tax free
20% tax on 22k = 4,400
NI at 13% = 2,860
Total deductions from 22,000 = 7,260
14,740/12 = 1,228.33 + 833.33 = 2,061.66 per month

If you have a student loan, this is 7% of anything over 10k

Are you contributing to a pension?

Are you going to use childcare vouchers to get the tax break?

No student loan.

it's a 1 year contract - will I be eligible for pension? Sorry I don't know this

Same with childcare, do you qualify if you are on a fixed term contract?

Re childcare, it depends if they run the voucher scheme, although I think you can now reclaim through your tax return. I'm afraid that I'm not too sure of the new system or when it comes in.

You will be able to contribute to the pension scheme, if you wish. This isn't mandatory, however a lot of employers will only match what you contribute, if they offer a contribution at all. Auto enrolment hasn't been rolled out everywhere yet, it depends on the company size.

Hey Theres thanks so much for all your help. Auto enrolment has been implemented for pension. They do offer childcare vouchers, I just don't know if I'd be eligible for them.

You're elligible if you're a basic rate tax payer I believe.

For auto enrolment if you pay 5% they will pay 3% so it is worthwhile if you can afford it.