Any one good at sums?

jeannieblue

I'm looking at taking my pension next year and with a small annuity I get, my annual income would be £9,151.80.

At present I am working full time and annual wage after tax is £15,900.00.

I need to earn/receive my working salary to enable me to live & pay bills, but at the same time I would like to slow down a bit and perhaps work part time.

How much can I earn on top of my pension to achieve a similar amount? I'm a bit useless with figures and working out the tax etc. is giving me a headache......

Be kind

I'm on my own, no dependents - apart from a dog....

Lokolo

If you use your personal allowance on your pension and pay all tax on all other earnings:

£9,150 - £7475 = £335 tax, so net income is £8815

You would need to earn £8860 (£7085 net, which is £8860 net) extra to live off £15900 after tax, this doesn't include NI contributions though.

hugheskevi

Under age 65 you get a different personal allowance to after age 65, and after State Pension age you don't pay National Insurance contributions.

Up to age 65, you have a personal allowance of £7,475.

To get a net income of £15,900 you will need to have a gross taxable income of £18,006.25.

Deducting your pension and annuity income, that means you need to earn £8,854.45 before tax to have a net income of £15,900.

After age 65, you need to have a gross taxable income of £17,390. Deducting your pension and annuity income, that means you need to earn £8,238.20 before tax to have a net income of £15,900.

Your income of £9151.80 is below the personal allowance at age 65 (£9,940) so you might want to consider increasing your pension income to at least that level. That will also make the transition from work to complete retirement easier when it eventually comes. You might want to consider deferring your State Pension for a year or so to achieve this - one of your options is to take a higher State Pension after deferral, which would be a good way to use up all of the tax free allowance post 65.

jeannieblue

Thank you to Lokolo and Hugheskevi.

It gives me some pause for thought and something to work on.