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Work/bonus/pension advice
adamh87
Posts: 51 Forumite
Hi,
Little help?
I'm 32, have a solid job but rent in London. I earn £34k and am due a 10% bonus in a month's time.
As the lump sum gets paid in one month, it'll be a pretty heavy month on tax. I have £18k put aside for a deposit for a house (hopefully returning to the north east or just somewhere cheaper than the capital!) in the next 12 months.
I don't have a lot of pension savings - a generous (given how little I put in) public sector one from ~1 year of work when I was 22, plus the one at my current job. Current work put in 3.15% regardless of what I put in, so I match that though I was putting in 12% last year.
My living expenses have gone up a little this year (moved in with partner, who also has good job and savings) but I still usually save £700 a month.
So my question is... am I better off dumping it into a pension, avoiding 40% tax (my pension is salary sacrifice and I can modify contribution levels as needed) or should I take it all in cash and add to my house deposit? I can still get some extra cash by taking everything up to the 40% level, but I'd rather not give my money to Hammond (or the loathsome student loan company! :mad:) if I can avoid it.
If anyone has any friendly advice, please do reply. Many thanks!
Little help?
I'm 32, have a solid job but rent in London. I earn £34k and am due a 10% bonus in a month's time.
As the lump sum gets paid in one month, it'll be a pretty heavy month on tax. I have £18k put aside for a deposit for a house (hopefully returning to the north east or just somewhere cheaper than the capital!) in the next 12 months.
I don't have a lot of pension savings - a generous (given how little I put in) public sector one from ~1 year of work when I was 22, plus the one at my current job. Current work put in 3.15% regardless of what I put in, so I match that though I was putting in 12% last year.
My living expenses have gone up a little this year (moved in with partner, who also has good job and savings) but I still usually save £700 a month.
So my question is... am I better off dumping it into a pension, avoiding 40% tax (my pension is salary sacrifice and I can modify contribution levels as needed) or should I take it all in cash and add to my house deposit? I can still get some extra cash by taking everything up to the 40% level, but I'd rather not give my money to Hammond (or the loathsome student loan company! :mad:) if I can avoid it.
If anyone has any friendly advice, please do reply. Many thanks!
0
Comments
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Little confused.
If your earning £32K why do you think you're in the 40% bracket?0 -
Yeah you're right it won't take me over the limit on an annual basis, but won't I pay 40% for the bonus month then have to claim it back in April? That'll also incur lots of extra NI/student loan that I can't get back...0
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Yeah you're right it won't take me over the limit on an annual basis, but won't I pay 40% for the bonus month then have to claim it back in April? That'll also incur lots of extra NI/student loan that I can't get back...
If you're on PAYE and a cumulative (standard) tax code then I don't think you'll have to wait until April - you're right in saying that you'll overpay in the month you get your bonus, but then it should correct itself in the following month(s)0 -
Yep you're right - many thanks for your help!0
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