Faze retirement help

zutman

I’m 55 and  been offered to go down to 4 days a week and need help with working out my figures, I’m currently earning 60k a year and paying 40% on 10k if I drop down to 4 days my wages will drop down to 50k, I can seem to work out exactly how worse off I will be to see if it’s worth it, thanks in advance if anyone has the time to help 

The_Fat_Controller

Try this

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

Dazed_and_C0nfused

You might be pleasantly surprised by the reduction in net pay.

20% less time at work for maybe only a 10% drop in take home pay 😀

Simon11

zutman said:

I’m 55 and  been offered to go down to 4 days a week and need help with working out my figures, I’m currently earning 60k a year and paying 40% on 10k if I drop down to 4 days my wages will drop down to 50k, I can seem to work out exactly how worse off I will be to see if it’s worth it, thanks in advance if anyone has the time to help 

Are you not able to use salary sacrifice to fill your pension? If you are putting in £10k yearly into your pension atm, then you aren't paying 40% tax on much income.

Albermarle

zutman said:

I’m 55 and  been offered to go down to 4 days a week and need help with working out my figures, I’m currently earning 60k a year and paying 40% on 10k if I drop down to 4 days my wages will drop down to 50k, I can seem to work out exactly how worse off I will be to see if it’s worth it, thanks in advance if anyone has the time to help 

Your pension contributions could be affecting the figures, depending on how much they are and how they are paid.

zutman

I pay 15% into my standard life pension and the company puts 3% 

zutman

in the deductions my pension contributions is listed with the others EG dental insurance, tax, NI, 

Simon11

zutman said:

I pay 15% into my standard life pension and the company puts 3% 

So you put £9k into your pension before tax (very tax efficient btw). That means you only pay income tax on income of £51,000 and thus only paying 40% tax on around £700 (providing you have no other deductions).

Thus if you go down to 4 days a week, you will save tax of 20% on that days worth of earnings given up.

zutman

im not so sure my pension is deducted that way as I have to claim the 40% bit direct from HMRC I am going to talk to payroll tomorrow to confirm which way they are deducting my pension I'm getting more confused 

Dazed_and_C0nfused

zutman said:

im not so sure my pension is deducted that way as I have to claim the 40% bit direct from HMRC I am going to talk to payroll tomorrow to confirm which way they are deducting my pension I'm getting more confused 

You usually only need to claim anything from HMRC if you are paying via the "relief at source" method.

For example you pay £100 and the pension company adds £25 making a gross contribution of £125. 

The gross contribution increases your basic rate band by £125 meaning you can pay more tax at 20% and less at 40%.

zutman

I’ve had a work with my payroll and the pension company claims back the tax so I take it the pension I pay does not decrease my gross pay which is bad news