Actual loss from pay

Noobie2011

Brynsam wrote: »

Sounds as if your wife's pension contributions are taken from her gross pay before tax is deducted (that's not the same thing as salary sacrifice).

Whether you are on salary sacrifice depends on what you've signed up to. The info you've given doesn't enable anyone else to work that out. Check your paperwork or ask your HR/payroll people.

Thanks,

I have just checked and my pension is Salary Sacrifice so are my working out above correct as in is that how you work out the Salary Sacrifice?

Yes my wifes pay is taken from her Gross Pay so as you say not Salary Sacrifice but is this Tax Relief etc

Just trying to work out how I can then know what is exactly being reduced off our net pay as opposed to the tax we are saving etc

Brynsam

Where contributions are taken from pay before tax is deducted, full tax relief is given automatically. NI contributions are based on full salary, including the pension contributions.

Your position - follow the advice in post 6 above.

Novice_investor101

https://www.thesalarycalculator.co.uk/salary.php

I use that calculator, it is pretty much spot on. I know my pension & other deductions are by salary sacrifice tho. I put the figuresin with & without the pension in & then see what the difference is in my take home pay. Then just subtract that from the pension amount & it tells me how much it's costing me & how much is a tax saving.

Noobie2011

Novice_investor101 wrote: »

https://www.thesalarycalculator.co.uk/salary.php

I use that calculator, it is pretty much spot on. I know my pension & other deductions are by salary sacrifice tho. I put the figuresin with & without the pension in & then see what the difference is in my take home pay. Then just subtract that from the pension amount & it tells me how much it's costing me & how much is a tax saving.

So I now know my pension is Salary Sacrifice so have inputted my figures and get the below

Standard No Pension

Yearly
Gross Income - £31,000
Taxable Income - £19,150
TaxBREAKDOWN - £3,830
National Insurance - £2,709.12
2018 Take Home - £24,460.88

Monthly
Gross Income - £2,583.33
Taxable Income - £1,595.83
TaxBREAKDOWN - £319.17
National Insurance - £225.76
2018 Take Home - £2,038.41


40% Pension Contribution

Yearly
Gross Income - £31,000
Pension Deduction - £12,400
Taxable Income - £6,750
TaxBREAKDOWN - £1,350
National Insurance - £1,221.12
2018 Take Home - £16,028.88

Monthly
Gross Income - £2,583.33
Pension Deduction - £1033.33
Taxable Income - £562.50
TaxBREAKDOWN - £112.50
National Insurance - £101.76
2018 Take Home - £1335.74

So according to this:

- For £1033.33 Pension contribution a month my net pay would only be affected by £702.67 due to the tax and NI savings

Is this correct and then I can also add to the £1033.33 the 7% my Employer would put in of £180.83

Novice_investor101

Do you actually contribute 40% of your gross salary to your pension?
For instance, I contribute 8% to mine via salary sacrifice so I input everything accurately including the 8% for pension & see what my take home pay is (& how much the pension amounts to). Then I do the same but put 0% for pension & see what my take home pay is then.
I then minus the difference in take home pay from the pension amount & that is what I deem to be the "tax relief" I get.

Using this calculator I worked out at my last payrise that increasing my pension from 6% to 8% would cost me about £23 in take home pay a month but would be an extra £65 a month into the pension - that is from the increased amount I was paying in, the saving on tax & my employer also paying in 2% more to match it.

AnotherJoe

MallyGirl wrote: »

And there is the NI saving too - 12% for a basic rate tax payer.
Your employer may also give you the NI they are saving too (mine doesn't, Dh!'s Does)

... and mine, when i was in such a scheme, split it 50/50

Noobie2011

Novice_investor101 wrote: »

Do you actually contribute 40% of your gross salary to your pension?
For instance, I contribute 8% to mine via salary sacrifice so I input everything accurately including the 8% for pension & see what my take home pay is (& how much the pension amounts to). Then I do the same but put 0% for pension & see what my take home pay is then.
I then minus the difference in take home pay from the pension amount & that is what I deem to be the "tax relief" I get.

Using this calculator I worked out at my last payrise that increasing my pension from 6% to 8% would cost me about £23 in take home pay a month but would be an extra £65 a month into the pension - that is from the increased amount I was paying in, the saving on tax & my employer also paying in 2% more to match it.

Well we are very late to the party with me being 40 and my partner 31. We contributed to a previous pension in our last place of work but only minimum amounts so ignoring that for now. Now we are both in new jobs and have an idea of when we want to retire etc we are planning around that.

We have a few debts and are currently selling/buying a new house so it will take about 12 months to get everything in shape so as of Jan I have planned we both pay the max to get the max employer contributions. However in about 24 months worst case we will be in a position to both pay about 35-40% to our pension but have been cautious and calculated it as we would not start this until 5 years time. This gives me 10 years to my retirement age and my wife 19 years so if my figures are correct the 35-40% is what we would need to pay to sustain the lifestyle we want.

Sorry for the long reply but all this is really confusing and just want to make sure we have got it right and are investing the right amounts in the right place.

Novice_investor101

Then that calculator should be pretty spot on. I use it as a tool to work out what impact changing my salary sacrifice deductions would have on my take home pay, student loan repayments & pension contributions, & also when I get a payrise to work out how much more my money could be worth if I salary sacrificed the payrise instead of taking it as taxable pay. I've always found it be accurate without being overly complicated.

Noobie2011

Novice_investor101 wrote: »

Then that calculator should be pretty spot on. I use it as a tool to work out what impact changing my salary sacrifice deductions would have on my take home pay, student loan repayments & pension contributions, & also when I get a payrise to work out how much more my money could be worth if I salary sacrificed the payrise instead of taking it as taxable pay. I've always found it be accurate without being overly complicated.

Yes it seems pretty good but the only thing worrying me my work has a tool when I log into my pension and you can adjust the % and retirement age but when I match it to the Salary Calculator they have different end figures with my work tool saying more

Novice_investor101

My works pension system is the same - it always works out an estimate that is more than I actually get. Mainly cos it doesn't take into account other deductions like a share save scheme & student loans etc.
The online calculator matches my monthly payslip to within a few pence, which is why I use it so often.

I am a basic rate taxpayer without many payroll complications, so don't know if that is why it's accurate for me.
Put all your current information in & if it matches your last payslip or not will show whether it works for you.