How to plan? Job offer 100k and up to 20% bonus

[Deleted User]

housestress said:

Thank you, and to do this at around bonus time near the end of the tax year?

When you are best able to determine your income for the whole tax year.

housestress

So salary and benefits are clear at the start of the year, but bonus is announced and paid in March at the end of the tax year

Albermarle

housestress said:

So salary and benefits are clear at the start of the year, but bonus is announced and paid in March at the end of the tax year

From HMRC/pension provider point of view, it can be added at any time in the tax year. So if you are in a position that you do not know exactly what your income will be, you can estimate it. In any case your salary will be plenty high enough to make the full £40K contribution if you want.
However be aware that the £40K includes tax relief and your employer contribution. To complicate things a bit further if you have not added £40K in the last three tax years you bring forward unused allowance ( providing you have a high enough salary to make use of it)
You will also need to find out once you start how pension contributions are made.
Net Pay ( before tax so you get the tax relief automatically)
Salary sacrifice ( you also get the tax releif automatically)
Relief at source- the contributions come out of taxed pay. The pension provider pays basic rate relief into your pension and you have to claim back the rest.
Probably useful to read through this.
Tax relief on pension contributions | MoneyHelper

Dazed_and_C0nfused

Also, if your taxable income will be £100k or more you will have to start completing Self Assessment returns each year.  

That applies even if you make relief at source pension contributions to being your adjusted net income down to £100k or less.

housestress

Thank you this is really helpful, I will find out some details once I start. Is it a given to right off the 30 free hours?

ORC

Practically, you'll be contributing a certain percentage of your base pay into your pension - say 10% for ease of number. When you then get to March and find out your bonus is say 20k, you know you'll need to contribute just over 10k of the bonus to keep you below 100k. I would probably add in a buffer to make sure are definitely below 100k unless you are very clear on your taxable pay. I think 100k is a cliff edge test for the 30 free hours so you don't want to be just over!

Just speak to someone in the pension/reward team to confirm how the process works (eg that you can contribute part of the bonus) and that they use salary sacrifice.

retiringtoosoon

I’d be maximising pension contributions including any carry forward available to make life simple. I’m sure you’d survive on £60k + taxable

housestress

Thank you everyone, this has been really helpful! I may just need to pay for childcare instead of the 30 free hours. Does anyone know the repayment method of the free hours in case I am not clear at the start of the tax year please?

Grumpy_chap

With the salary level indicated by the OP, and the level of the OP's understanding on matters of taxation, it would be prudent for the OP to engage the professional services of an Accountant and an Independent Financial Advisor to review and advise on the OP's financial position now and for future plans (retirement one day).  This can give far more complete advice than can be given by even knowledgeable but random strangers on the forum based upon small amounts of information into the OP's position.

housestress

Thank you very much, really good point and definitely something that I will do