Pay rise percentage I actually get in my pocket - does this seem right?

Da_Crojanz

I got a pay rise last month that took me over the 40% threshold in Scotland (which triggers around 43.7k). My salary increased from 42.7k to 46.6k and with this got £117 extra in my pocket this month, which will equate to around £1404 a year or around 36% of the salary increase.

This felt crushingly low, but when I did the figures after some panic (and more chat elsewhere on the forum) I've worked out my deductions should be...

41% tax on around 2k of the raise
21% tax on around 1k of the raise
13.5% NI
9% student loan
4% pension

This should still leave me with £1808 at the end of the year. Various tax calculators seem to suggest this but crucially HMRC's seems to tax me more and leave me with the amount I actually get.

Does this all look right and does it set a realistic precedent for what percentage of any future raises I can actually expect to see?

liz_bartun

Can you post a copy of your payslip (with personal information removed, of course)?

chrisbur

If you could give the details as asked for when you queried this earlier someone will be able to explain.
To be precise from the payslip
Taxable gross
Tax paid
Tax code
Tax basis (usually follows code  eg X 1 0 C NC Non-cumulative (may be abbreviated) 
Taxable gross to date
Tax paid to date

[Deleted User]

  The pay increase is £3900 not £3000. (You may have used 46.6k- 43.7k when the increase is 46.6k- 42.7k)

41% of £2900 (not £2000) is £1189
21% of £1000 is £210
The NI is £3900 at 13.5% is £526.50
Student Loan is 9% of £3900 £351
Pension is 4% of £3900 - £156.

Total deductions - £2432.50 - net increase of £1457.50. 

You need also to factor in the pension method

[Deleted User]

chrisbur said:

If you could give the details as asked for when you queried this earlier someone will be able to explain.
To be precise from the payslip
Taxable gross
Tax paid
Tax code
Tax basis (usually follows code  eg X 1 0 C NC Non-cumulative (may be abbreviated) 
Taxable gross to date
Tax paid to date

I don’t think there is much in it if the correct pay increase forms the basis of the calculations.

Da_Crojanz

[Deleted User] said:

chrisbur said:

If you could give the details as asked for when you queried this earlier someone will be able to explain.
To be precise from the payslip
Taxable gross
Tax paid
Tax code
Tax basis (usually follows code  eg X 1 0 C NC Non-cumulative (may be abbreviated) 
Taxable gross to date
Tax paid to date

I don’t think there is much in it if the correct pay increase forms the basis of the calculations.

Yea you’re right thanks. Bit of a downer to see how little I get of the raise but have to live with it!

[Deleted User]

Da_Crojanz said:

[Deleted User] said:

chrisbur said:

If you could give the details as asked for when you queried this earlier someone will be able to explain.
To be precise from the payslip
Taxable gross
Tax paid
Tax code
Tax basis (usually follows code  eg X 1 0 C NC Non-cumulative (may be abbreviated) 
Taxable gross to date
Tax paid to date

I don’t think there is much in it if the correct pay increase forms the basis of the calculations.

Yea you’re right thanks. Bit of a downer to see how little I get of the raise but have to live with it!

No expert on Scottish tax but 41% PAYE and 13.5% NIC on earnings £43700 to £50k odd is seriously grim!

af1963

No expert on Scottish tax but 41% PAYE and 13.5% NIC on earnings £43700 to £50k odd is seriously grim!

Yes, once you're earning over £43K with a student loan, you are paying about 64% marginal rate.

Yea you’re right thanks. Bit of a downer to see how little I get of the raise but have to live with it!

Not necessarily ... 

If the OP can afford to put the increase ( or even part of it) into their pension, they could get back all the extra tax paid on that amount, and if they can do it via a salary sacrifice in future, they would save the NI on it as well.   I think that would also reduce the student loan payment - never had to deal with that - but I expect someone here could confirm.

Taking it all as take home pay : they get roughly £1450, plus £150 in their pension
Taking it all as pension contribution: they could get £3900 in their pension, about 2.5 times as much. Anyone know where else you can get an instant 150% return on an investment ?

pjread

There are a few of these cliff edges - the one you hit is unique to Scotland, but don't worry you're closing in on the 50-60k one if you have kids/child benefit which got me comfortably over 65% marginal tax a while back

Flugelhorn

and another stinker at 100

Da_Crojanz

Thanks for all the replies on this one. Think that’s it confirmed!