I am shocked at how little my net salary is going up in my new role

[OneSparklyGoldBear]

currently on 80k salary with a 10k allowance. I have now been offered a new role for 95k salary with 7k allowance.

When I am working out my net income it seems to be coming to £300 extra a month only with new job!

I make sure I sacrifice enough of my salary into pension to avoid 60% tax at above 100k.

Is my maths incorrect or is it simply a small net increase?

Why 10%? 2% salary sacrifice enough to get below 100k?

Go back to your old job so, if you feel you are not getting enough !!

Yes - you can put your pension contributions into the calculator.

I assumed that:

• Your allowances are fully taxable with no special tax treatment, so we are comparing 90k with 102k
• You are sacrificing down to 99k via pension contributions to stay under the 100k limit
• You have no student loan or other deductions (e.g. annual train ticket, cycle to work scheme, etc)

This gives, via salary calculator e.g thesalarycalculator.co.uk:

• 90k is £5,229.79 net after tax
• 99k is £5,664.79 (£435 extra)
• 102k £5,776.45 (£547 extra)

What is your maths? Do your assumptions differ from mine? More pension or student loan deductions might result in the difference being £300ish.

So your maths might not be 100% right but it's not going to be life-changing amounts. (Even if £300 would be life-changing for someone in different circumstances, what's relevant is the marginal value to OP who is already on £5k+.) With that said, it is still helpful and does add up, just needs to be weighed against the additional stress and any extra costs it would result in, just like any job change.

This is similar to mine thank you for helping. I have no student loan. Will always look to keep under 100k to avoid 60% tax.

What % salary sacrifice into pension did you do?

Glad it helped! I've actually never done any pension sacrificing (my job puts in 9% without me contributing so it's not empty). When I first crossed the £100k barrier I had reasons to value a smaller amount of cash now rather than more in the future. Now I'm enough past the tax trap that it's not worth it to sacrifice down. You do you... I don't think there's any kind of magic 10% rule as PP have suggested, every investment including pensions is up to you to decide so if you're only doing it to stay under £100k there's no need to sacrifice even more unless you would have done it anyway.

That is pretty cool that you get 9% with 0 from your side. Pretty good deal.

For the following calcs how much % did you salary sacrifice into pension?

• 99k is £5,664.79 (£435 extra)
• 102k £5,776.45 (£547 extra)

Whose entire income is 300 a month?

Surely if you earn at that level, you should understand how tax works?

Tax is very complicated. I have been helping one child complete his tax return today and it is reminding me of that and I have filled in a tax return which seem to change almost every year just to make it even harder, since about 1990.

As for the 60% trap etc it make it even more complicated. Back when I started everyone got a personal tax allowance (and child benefit if you had children) as we were all in it together, one nation - you pay in you take out. We seem to have lost that now with hammering those who dare to earn a lot.

so you would recommend to always keep gross at 99k via salary sacrifice?

6% salary sacrifice

Well ideally everyone should understand how tax works. But why particularly when at that level? I don’t really understand the logic.

I can understand that argument if OP were an accountant, but what if she were an architect, an engineer, a comedian, a plumber, an airline pilot?

You'd have to be pretty smart and switched on to earn that amount.

This seems to be the common perception, but why would e.g. someone who is a really good plumber be “switched on and smart” about tax?

It would certainly help them to minimise their tax liability, but it doesn’t really affect their ability to bill customers for plumbing, with is the main factor in their earnings.

Sorry, not meaning to pick on you, but this is said so often on here. And it’s usually meant to mean “I don’t believe they really earn that much if they don’t know everything about tax”.

Verifying something is not wrong...

I once got a promotion that paid me £6 a month extra

Tax threshold

Why are you asking people here to do the calculations in the online calculators rather than you? I recall you e started other threads asking the exact same thing.. are you really incapable of using these online calculators yourself?

I am asking for a double check.

Someone on £300 a month is in complete poverty, benefit payments are higher than that. This isn’t the baseline on which to judge salaries.

I'm genuinely shocked that anyone can earn that much money and have such weak numeracy skills and poor understanding of tax rules!

I'm intrigued by the 10 % pension figure if you earn over 100k. NHS pension make us contribute that much earning over 45k! We have no choice other than that or leave.

Hello OP, you asked a few questions about how much to put into your pension via salary sacrifice. All depends really on how old you are (how long you have to pay in and let it grow), how much you have in your pension pot already, how much you ideally want in there, how much you can afford, how much your employer contributes etc.

We are a x1 high earner family, and SAHM. So there’s more pressure to put into the pension to save for both of us. After moving house and having babies we got the pension statement one day and realised there was so little in the pot. Under 20k. Given my partner had been paying in for years, we realised his contribution (I think about 5%, and his employers, only 3%) was never going to be enough to retire.

His earnings have gone up a lot since and we have dramatically increased our pension contributions (via salary sacrifice) to avoid the 60% tax trap. We also want to retire early (I will be going back to work asap).

Given that 100k in a pension pot will give you about 4k return a year, we’ll be aiming for at least 500k in there. The general rule is take the age that you start paying into your pension, halve it, and that’s the total percentage contributions you should be paying in (employer and employee combined). But again, depends on what you can afford, when you want to retire, if you are rely on inheritance etc. we can’t so need to work on this now. Also, you can currently withdraw 25% at 57 tax free so huge tax incentive. We will pay off the mortgage and given a deposit to children. You will pay tax though when you get an income from it.

Also, be careful to fly too close to the 100k limit. If you only put in a couple of percent, and hover at the end of 90k, then get a pay rise or bonus you will go over 100k, have to do a tax return and lose free childcare etc

If you do end up doing a tax return, I recommend doing that straight after the tax year ending in April- (once you have a P11D this could be July) this will give you enough time to save the money if you owe any back (due the following Jan)

I’m genuinely shocked that some people don’t understand the huge range of skills that pay well.