How much will my pay increase by?

00ec25

WOODWOOD wrote: »

Thanks all for the replies.

00ec25, thanks for the in depth details and the explanation.
I currently contribute 4% to the company scheme. The new job doesn't offer a pension so I will be looking to start a personal one.

The lower paying job does have more benefits, like the pension, which is why I am trying to do these calculations to see what the overall benefit of the new job is once I've taken these things into account.

Thanks again.

since agrinnall believes one should not understand these things I will leave him/her to find an online source to explain the impact of pension

as a starter for 10: the pension cost, for tax purposes, is grossed up and deducted from your gross salary before you calculate the taxable pay. This means if you want to lock money in a pension you can pay enough in to keep you below the 40% taxable pay threshold. This is a basic tax planning strategy for those who can afford it - the real effect is you save 20% tax on the pension contribution on the assumption that when you retire you will only pay 20% tax on your pension in payment rather than paying 40% tax on income now, so the overall saving is 20%

if you pay into a personal pension as opposed to a company scheme it slightly different as you have to claim the 20% from HMRC via a tax return but you then get that back in cash each year rather than it going into your pension scheme (if its a company scheme then you don't get the cashback but you will get a bigger pension because there is more going into your pot than with a personal scheme)

agrinnall

00ec25 wrote: »

since agrinnall believes one should not understand these things

Not sure how you've arrived at that conclusion, but it is completely false.

agrinnall wrote: »

While I'd encourage anyone to understand how their tax is calculated, I think it's stretching it a bit to say that your lengthy list of calculations is easier than putting 1 number (or a few if you're not completely standard) into an online calculator .