Net salary difference

Grumpy_chap

sultan123 said:

Dazed_and_C0nfused said:

sultan123 said:

The July NI limits seem to be increasing net pay?

That is the whole point of them.  The amount you can earn before paying NI is increasing so those already earning enough to pay NI will pay less.

Less NI deductions = more net pay.

What did you think it meant???

I thought it would increase net pay for those who earned lower amount

That is what DaC said - less NI = more net pay for those earning a "lower amount" which needs to be above the current NI threshold but below the point at which the increase of 1.25% offsets the increase in the threshold.

What salary level were you running the model for?
AIUI, the increase in NI will outweigh the threshold for salaries at the £80k - £90k levels mentioned in this thread.
Were you running the model for a different salary level, for a family member / friend?

sultan123

Grumpy_chap said:

sultan123 said:

Dazed_and_C0nfused said:

sultan123 said:

The July NI limits seem to be increasing net pay?

That is the whole point of them.  The amount you can earn before paying NI is increasing so those already earning enough to pay NI will pay less.

Less NI deductions = more net pay.

What did you think it meant???

I thought it would increase net pay for those who earned lower amount

That is what DaC said - less NI = more net pay for those earning a "lower amount" which needs to be above the current NI threshold but below the point at which the increase of 1.25% offsets the increase in the threshold.

What salary level were you running the model for?
AIUI, the increase in NI will outweigh the threshold for salaries at the £80k - £90k levels mentioned in this thread.
Were you running the model for a different salary level, for a family member / friend?

Was running for a salary level of 80k which works out less in april but more in july in terms of net pay?

sultan123

sultan123 said:

Grumpy_chap said:

sultan123 said:

Dazed_and_C0nfused said:

sultan123 said:

The July NI limits seem to be increasing net pay?

That is the whole point of them.  The amount you can earn before paying NI is increasing so those already earning enough to pay NI will pay less.

Less NI deductions = more net pay.

What did you think it meant???

I thought it would increase net pay for those who earned lower amount

That is what DaC said - less NI = more net pay for those earning a "lower amount" which needs to be above the current NI threshold but below the point at which the increase of 1.25% offsets the increase in the threshold.

What salary level were you running the model for?
AIUI, the increase in NI will outweigh the threshold for salaries at the £80k - £90k levels mentioned in this thread.
Were you running the model for a different salary level, for a family member / friend?

Was running for a salary level of 80k which works out less in april but more in july in terms of net pay?

Any thoughts?

Grumpy_chap

sultan123 said:

Was running for a salary level of 80k which works out less in april but more in july in terms of net pay?

OK, so I think this is an anomaly that will only occur once.

I have ignored student loans, pension salary sacrifice, BIK and any of the things that can complicate the scenario.  Keeping it simple so that we are only concerned with the base salary and NI changes.

Using the calculator online that I find easy to use, for £80k salary:

• take home in 2021-22 is shown as £55,090
• take home in 2022-23 is shown as £54,250.  This reflects the 1.25% social care levy (but current NI threshold).
• take home in 2022-23 from July 2022 is shown as £54,607.  This reflects the 1.25% social care levy PLUS the increase in the NI threshold which is not coming into force until later.

That took some thinking through.  The take home in July is still lower than this tax year (as per DaC), but improved over where it would have been for the first three months of the next tax year (April, May, June).  Why the Chancellor choose to change the threshold in the middle of the tax year is unknown.

Hope that helps, and sorry that I upset you earlier.

sultan123

Grumpy_chap said:

sultan123 said:

Was running for a salary level of 80k which works out less in april but more in july in terms of net pay?

OK, so I think this is an anomaly that will only occur once.

I have ignored student loans, pension salary sacrifice, BIK and any of the things that can complicate the scenario.  Keeping it simple so that we are only concerned with the base salary and NI changes.

Using the calculator online that I find easy to use, for £80k salary:

• take home in 2021-22 is shown as £55,090
• take home in 2022-23 is shown as £54,250.  This reflects the 1.25% social care levy (but current NI threshold).
• take home in 2022-23 from July 2022 is shown as £54,607.  This reflects the 1.25% social care levy PLUS the increase in the NI threshold which is not coming into force until later.

That took some thinking through.  The take home in July is still lower than this tax year (as per DaC), but improved over where it would have been for the first three months of the next tax year (April, May, June).  Why the Chancellor choose to change the threshold in the middle of the tax year is unknown.

Hope that helps, and sorry that I upset you earlier.

Thank you that is really helpful and Iam sorry if I had been inconsistent with my questions.

sultan123

Sorry to bump but can anyone tell me how to do accurate calculation as salary if made up of car allowance too but that car allowance does not count towards pension.

So 85k and 7.8k car allowance for example with 5% salary sacrifice into pension

Dazed_and_C0nfused

Just add the two separate components together to get your taxable and NIC'able amount.

For example salary less pension plus car allowance.

sultan123

Dazed_and_C0nfused said:

Just add the two separate components together to get your taxable and NIC'able amount.

For example salary less pension plus car allowance.

Sorry how do you mean

Grumpy_chap

Take the pensionable salary £85k and multiply by 0.95
Add the non-pensionable car allowance to the answer.
Plug that outcome into an online salary calculator.

You seem to have a new scenario of high paying job that needs assessing every few weeks.  This is at least the second scenario just this week.

It would be worth engaging the services of an Accountant.

sultan123

Grumpy_chap said:

Take the pensionable salary £85k and multiply by 0.95
Add the non-pensionable car allowance to the answer.
Plug that outcome into an online salary calculator.

You seem to have a new scenario of high paying job that needs assessing every few weeks.  This is at least the second scenario just this week.

It would be worth engaging the services of an Accountant.

Would I need to indicate 5% salary sacrifice in the online calculator if I do 85x0.95?

I am hoping to have accountant soon