!! Urgent - over £100k salary and bonus offer

RoseLondon

My husband got an offer today for £110k basic salary plus 20% bonus.

We have heard once his salary crosses the £100k, his net income to take home after tax would be actually less than he's earning now (£92k). His the only bread maker so that we want to minimise the tax exposure.

Shall he go back to ask for putting everything above the £99k into his pension? That applies to both salary and bonus?

Would the tax free rule applies to his own chosen pension provider?

What if the chosen one is located abroad so that we may take the money out to pay off the Mortgage instead waiting till we are over 60 years old?

Please help!

Tiptop79

From Google:
As a consequence the Marginal Rate of Tax for someone with income between £100,000 and £122,000 will be 60% (Tax at 40% on income over £100,000 up to £122,000 PLUS Tax at 40% on the loss of Personal Allowance up to £11,000). You can recover the Personal Allowance by reducing your income below the £100,000 limit.14 Mar 2017


Interested to see the response you get on this as I am in a similar position myself. I had no idea until I started researching the implications of this and when I saw my take-home pay last week I nearly went to work to ask for me to go back to my old salary.

Instead, I am going to salary sacrifice everything up to £95k in the new tax year so I don't get stuck paying, I believe it works out, 60+% tax.

martinsurrey

comments in bold below

RoseLondon wrote: »

My husband got an offer today for £110k basic salary plus 20% bonus.

Congratulations!

We have heard once his salary crosses the £100k, his net income to take home after tax would be actually less than he's earning now (£92k). His the only bread maker so that we want to minimise the tax exposure.

incorrerct, his marginal take home rate decreases, but the £
in his/your pocket increases

Shall he go back to ask for putting everything above the £99k into his pension? That applies to both salary and bonus?

its an option, but not necessary, if you dont contribute anything to his pension (£110k salary +£22k bonus ) and you have no other benefits or income he would take home £6,644 a month average, if you salary sacrifice down to £99k he will take home £5,433 a month, so £14,500 less in your pocket per year, but will have £33k in a pension, its your choice which would be better for you

Would the tax free rule applies to his own chosen pension provider?

yes, as long its its a registered qualifying UK pension scheme

What if the chosen one is located abroad so that we may take the money out to pay off the Mortgage instead waiting till we are over 60 years old?

as above, if its a registered UK qualifying scheme he cant withdraw it that easily, if he can it wont be tax free

Please help!

RoseLondon

Thanks again for the insights.

If he wants to out the sum of above 100k into pension, does he need to agree with the company in the contract?

My husband thinks it doesn't affect the wordings in his contract and he thinks he just needs "sacrifice his salary into his pension somehow".

In my company, I had to sign an agreement with my company/pension plan to sacrifice that sum agree. By doing so, my salary in the revised contract actually was reduced. At least that's how I remember.

If he wants to put the Delta into pension, DOES he need to ask first and revise his contract?

Many thanks.

martinsurrey

RoseLondon wrote: »

Thanks again for the insights.

If he wants to out the sum of above 100k into pension, does he need to agree with the company in the contract?

My husband thinks it doesn't affect the wordings in his contract and he thinks he just needs "sacrifice his salary into his pension somehow".

In my company, I had to sign an agreement with my company/pension plan to sacrifice that sum agree. By doing so, my salary in the revised contract actually was reduced. At least that's how I remember.

If he wants to put the Delta into pension, DOES he need to ask first and revise his contract?

Many thanks.

No, if his company offers salary sacrifice pension they will have a process to change the percentages.

They will have 2 records for him, his "pensionable salary" this is the salary BEFORE salary sacrifice, and is used for calculating bonuses and pay rises, and his "payroll salary" which is the revised salary after salary sacrifice.

if his company doesn't use salary sacrifice he can just increase his personal contributions to his pension, same end result as above, but he loses the 2% ee NI and is employer loses the 13.8% eer NI