Is it worth holding out until 8 year lump sum?

lilgurn

I saw an interesting topic the other day but couldn't get my head around it, I'm hoping some financially savvy could work it out for me

At the moment, at my 6 year point I am entitled to £5000 and £7500 at the 8 year point. OR I can take £15000 at the 8 year point. This is taxable though, and my earnings at the 6 year point will be around 29k and 32k at the 8 year point. So is it worth taking the lump sum, with it being taxed or taking the six year sum and investing it in an ISA?

I.E. will the loss from tax + the loss of interest equate to the 2.5k difference?

Thanks

EDIT: Both options taxed, my post seemed to say only the lump sum was taxable

Cod_Almighty

Go for the full whack. You wont make up the difference in 2 years. I'll try and do some sums.

Cod_Almighty

Ok here goes, don't take my work as Gospel, i've just done quick calculations on an online interest calculator.

This is your £5k
Wage without Bonus £32000 tax paid £7,995.80
Wage with 6yr Bonus £37000 tax paid £9,545.80
Tax on the bonus £1,550.00
Bonus take home £5000-tax £3,450.00
£3,450.00 ISA at 3.5% for 2 years £3,700.00

This is your £7.5k
Wage without Bonus £32000 tax paid £7,995.80
Wage with 8yr Bonus £37000 tax paid 10,320.00
Tax on the bonus £2,325.00
Bonus take home £7500-tax £5,175.00

So I work out that with both bonus' you'll take £8,875.00

This is your £15k in a oner
Wage without Bonus £32000 tax paid £7,995.80
Wage with 8yr Bonus £47000 tax paid £12,958.00
Tax on the bonus £4,963.00
Bonus take home £15000-tax £10,037.00

I hope this makes sense and is correct.

Alias_Omega

There is a running thread on this on the RAF e-goat website.

http://www.e-goat.co.uk/forums/showthread.php?p=481669#post481669

Alias

imran_

the prickly subject of when to take the commitment bonus has come up a few times recently in the _____ office, it was a quiet sunday at work, honest !

i did try knocking up some figures, literally on the back of a fag packet, which could do with a little expanding and will post back soon.

without that though, it seems to be worth an extra £2,500 to wait for the 8year point and £15,000 sum, as opposed to the 6 and 8 year sum total of £12,500. :eek:

but as always, its always up to your personal circumstances as to when you take your bonus. :cool:

i was advised, in a roundabout way, to claim my initial bonus payment sooner rather than later, before the government decides to scrap the whole scheme! cash in the hand is better than a broken promise of money later