New job tax help

timed_out

First of all hi, I'm new in here and could really do with some tax help. I have had nothing but bother with HRMC over the last few years, so I am trying to get my ducks in a row.

I have been very fortunate to be offered a new role, on a salary that I never thought I would achieve, and the tax implications have me in a spin (I am no financial whizz!!).

My new salary would be £114.5K + £10k in benefits (car allowance & medical) + a yearly bonus of around £14K (I don't yet know if this can be taken as a pension contribution). On top of this, I receive a forces pension of around £6.7K PA, giving me a total of around £145K.  This is double my current income, hence not having a clue.

The new company offers a salary sacrifice scheme for pensions, so my question is:

If the bonus is transferrable into the pension pot, and I sacrifice £26K of my wages, this then allows me to use my £40K pension allowance. If I do this, does this then bring my new gross total to around £105K? or is it more complicated than that?

I am genuinely clueless, so I appreciate any help, guidance or ribbing.

Dazed_and_C0nfused

My new salary would be £114.5K + £10k in benefits (car allowance & medical) + a yearly bonus of around £14K

Presumably the car allowance is cash and medical a traditional "benefit in kind".

If the bonus is transferrable into the pension pot, and I sacrifice £26K of my wages, this then allows me to use my £40K pension allowance. If I do this, does this then bring my new gross total to around £105K? or is it more complicated than that?

No, in a lot of ways salary sacrifice is the simplest method.  There is no pension tax relief due to so you never have to tell HMRC or include it on your Self Assessment return as salary sacrifice means you give up salary in return for larger employer contributions

For tax purposes your starting point would be taxable income of £98.5k pay & benefits plus £6.7k pension income.

As your taxable income will exceed £100k you will be required to complete a Self Assessment return each year.

You should also read up on adjusted net income as once that exceeds £100k you hit a marginal tax rate of 60% due to losing some (or all) of your Personal Allowance.

If you have some annual allowance available to carry forward you may be able to contribute more than 40k to the pension.

Don't forget to factor in HICBC of that will now be an issue.

pjread

Maxing pension and doing whatever you can to keep ANI <£100k is likely a really good plan.  You're basically paying 63.75% tax on anything between £100k-£125k (40% income tax, 20% for tax allowance decrease, 3.75% for NI), I'd put that off as much and for as long as you can.