The Most Important Document You Will Never Read....

ukcarper

Graham_Devon wrote: »

It is a simple concept, and that's the problem.

The net wage on 30k is £22,762, or £1,896 a month.

If you are going to save 4k a year, then you leave yourself with £1,550 a month to live on.

Rent at £600 a month
Council tax at £120 a month
Gas & Electric at £60 a month (generous)
Water at £30 a month
Food, clothes, other general living items (toothpaste, over cleaner etc) £150 a month (very generous).
Car & Other related car maintenence (without any unforseen bills) £150 a month
Fuel £150 a month (for anyone travelling the average 30 miles a day).

Oops, I've only got £200 left to pay for everything else, including any items I need to buy (bed, fridge, literally anything).....any child maintenance payments, any telecommunication payments, any debt payments, any health (dental etc) payments, any car parking charges, any prescriptions, literally anything.....

Any two or three of those things crop up....car needs a new tyre or two? Oops....I'm in debt.

As I said....too simple...and void of reality.

if they have 2 kids they would get about £78 a week in benefits.

Also net pay is £1911.

kabayiri

If I understand correctly Joe and Joanna Average do not have a pension issue as such. They need only adopt the monk or nun lifestyle and squirrel away the resulting savings into a pension scheme.

Of course, because Joe and Joanna are no longer holidaying in UK, or buying iPhones, or having Sky, Pete and Petra Median are probably out of a job - people have just stopped buying those iphones you see, and the store had to close.

The pension fund also is disappointed with its investment returns in Sky - seems people are too busy saving to invest in Sky.

Not to worry. I hear Monks are quite good at brewing their own ale

grizzly1911

grizzly1911 wrote: »

Appreciate it is Grahams example. You demonstrated that if you want to live as a monk or nun you can have a lovely retirement (possibly).

Just out of interest - as you know about payroll, are student before tax similar to pension contributions or after tax?

I take it that loan repayments are taken from pay before Personal allowance applied so that is £106 less in the pot.

Sapphire

grizzly1911 wrote: »

The only real way is to get the country working again, and the volume of tax receipts up. The leaky bucket needs to be filled because as soon as you repair one hole another opens.

Hit one tax loophole and another is found. If the bigwigs don't have the morality to pay their share to society they won't.

Tinkering with adjustments to tax rates, reliefs and means testing is just like rearranging the seats on the Titanic.

Real jobs, real exports.

But don't you think someone, somewhere must do something about the huge immorality there is in our society – which has been passed down to the young today? Are not the shady, massive tax-avoidance practices not going to backfire one day against the bloated toads who are so immoral? I wouldn't actually mind such practices if it wasn't for the fact that people who earn a mere fraction of what these people do have to pay full taxes all their lives.

Is it only severe crises, like wars, or personal traumas, that bring out the best in people? If humans lead a life of ease, do they become more and more corrupt and selfish?

A._Badger

Sapphire wrote: »

Is it only severe crises, like wars, or personal traumas, that bring out the best in people? If humans lead a life of ease, do they become more and more corrupt and selfish?

We used to have a check against the immorality you point to - religion.

We have yet to work out what we might replace it with.

RenovationMan

Graham_Devon wrote: »

OK. Firstly you have put YOUR tax code into the PAYE calculator.

Without using a tax code, you will get my figure. Try it.

Actually 810L is pretty much everyone's tax code, not just 'MINE', unless you are in receipt of taxable benefits such as a company car (which most people aren't and your test case definitely wasn't).

http://www.uktaxcalculators.co.uk/

Yep, I tried it on the link I gave and it came back with:




Nothing put into Tax Code and net pay = £22,932.04 (I ringed it in red for you).

So perhaps you didn't use the link I supplied and used another calculator that put 'BR' (Basic rate) into the field if you didn't supply a tax code. This is what would happen if you started with a new company and didn't have your tax code. BR (Basic Rate) is emergency tax and is taxed without reference to your tax free allowance - hence why net pay is so much lower. Once you do get a tax code, your tax overpayment is refunded in your salary.

So, I think we've cleared that up and convinced me that you didn't do that deliberately. The fact remains that the guy now has an extra £170 net pay to play with.

As far as the pensions vs 'savings'/ISA is concerned... To be honest it just didn't enter my head that you guys were talking about using anything other than a pension vehicle for retirement planning! Why would anyone use an inferior product as 'savings' and ISA when they can get an instant 20% gain on their investment using a pension. More if they are also in receipt of tax credits.

Even more so if we looked at the guy who was on £8k a year, who would still receive the 20% tax rebate on his pension even though he doesn't earn enough money to pay tax! I mean, surely it's a 'no brainer'?

Graham_Devon

I think theres an air of apology in there!

Unfortunately that's what was being talked about. The calculator I used is here: http://listentotaxman.com/ Just whack 30k in and you'll see the figure I referred to.

You have indeed found £170 extra for the person over the year. I'd suggest that yes, its an extra bit of money, but no, it hardly changes a thing.

For the record, my original point was to suggest if the state pension was taken or means tested (following the discussion), how would people save the amounts needed with living costs what they are. I then gave an overview of VERY basic living costs. This didn't even include a TV licence. This was in response to wotsthat's suggestion that someone on 30k could just save 4k. I hought this was a suggestion void of reality. It seems it was.

RenovationMan

pqrdef wrote: »

£720 I make it.

Fifteen-all. New balls please.

Actually it's £576 - I did the tax rebate calculation wrong, and the correct result is now even more in my favour .

So the guy earns £8000 and the rule of thumb says he has to put away 9% of his gross salary. This equates to £576 or £48 that actually comes out of his paypacket because of the 20% tax rebate. I keep mentioning in this thread that 20% of the contribution is supplied by the government and I keep getting ignored by you guys.

So it's 'Deuce' on the mathematics and 'Advantage RenovationMan' on the pension payment. New balls please.

Here's the working out:
£8000/100*9 = £720 - 20% = £576 pa or £48 pm.

Note: If this particular guy pays £48pm into a personal pension plan, the plan providers claim the tax automatically for the customer and increase it to £60. Even though this guy is so low paid that he is beneath the tax threshold. This means that he can claim back the tax that he hasn't actually paid.

RenovationMan

Graham_Devon wrote: »

I think theres an air of apology in there!

Unfortunately that's what was being talked about. The calculator I used is here: http://listentotaxman.com/ Just whack 30k in and you'll see the figure I referred to.

You have indeed found £170 extra for the person over the year. I'd suggest that yes, its an extra bit of money, but no, it hardly changes a thing.

Yes, £170 isn't much but added to the extra £152 you accidently added to his (agreed) £4k pension contribution and the £90 you 'lost' from his monthly savings does add up. I'm sure you wouldn't turn your nose up at an extra £116 per month!

Indeed that equates to almost half of the pension contribution that you say he can't afford!! No wonder if he's losing £116 per month.

Interestingly enough you have made a big thing about my air of apology, yet you just turn a blind eye to your own 'misscalculations'. There's no air of apology for your 'mistakes'. Indeed in you retort (in red) a couple of pages back, you're still trying to cover up your pension overpayment of £152 by blaming 'pension' when it's nothing of the sort.

RenovationMan

pqrdef wrote: »

You're still ignoring inflation.

You're ight I am, because I said the guy would be on £8k for the rest of his working life, which he patently won't be. His salary will increase with inflation and therefore, applying the 'rule of thumb', so will his pension contributions. Also, the 20% extra you get by contributing into a pension pot rather than 'savings' or ISA help cover the inflation while the pot was building.

The annuity is indexed linked and so covers inflation while the pension is in payment.