Understand if I’m in high income tax band and remain in basic band

Hello, I’d like to know if the following assumptions and calculations are correct to ensure I remain in the basic rate band, so,

Tax year: 2023/24 
Tax code: 1257L 
Salary: £52k
Pension/salary sacrifice: 8%

Using the online calculators, is tells me I will pay tax at 20% only.
I assume salary sacrifice means 8% pension is deducted before tax and N.I? 
So then I’m taxed on 47840 (52000 – 4160) – is this correct and is it this that put me in the basic band?

Part 2…
I have had a pay rise to £57k from January (last month) and I would like to know how this affects which band I’m in.
I would need to increase my pension from 8%, but to what %?
How to do calculate changes to the last 3 months of the tax year to ensure I remain in the 20% band?

Thank you

Comments

  • vacheron
    vacheron Posts: 1,590
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    edited 5 February at 2:32PM
    Do you need to work it out?  At my last company we were able to just tell payroll to set a sacrifice level that kept us out of the 40% band.

    Failing that, your last payslip will show your gross salary to date, just subtract this from £50,271 (as you are on the standard tax code) and divide by the amount of payslips left before April. 

    Then tell Payroll to set your sacrifice to just below this figure. 

    Also be careful of any other non-ISA savings interest or anything which could nudge you above £50,271 if you don't factor in a sufficient safety margin. 
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  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,734
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    bss1983 said:
    Hello, I’d like to know if the following assumptions and calculations are correct to ensure I remain in the basic rate band, so,

    Tax year: 2023/24 
    Tax code: 1257L 
    Salary: £52k
    Pension/salary sacrifice: 8%

    Using the online calculators, is tells me I will pay tax at 20% only.
    I assume salary sacrifice means 8% pension is deducted before tax and N.I? 
    So then I’m taxed on 47840 (52000 – 4160) – is this correct and is it this that put me in the basic band?

    Part 2…
    I have had a pay rise to £57k from January (last month) and I would like to know how this affects which band I’m in.
    I would need to increase my pension from 8%, but to what %?
    How to do calculate changes to the last 3 months of the tax year to ensure I remain in the 20% band?

    Thank you

    Part 1. 
    You are correct but for the wrong reason.  You cannot deduct salary sacrifice contributions as these are employer contributions, not something you have paid. 

    By sacrificing 8% of your salary you only have taxable income of £47,840 in the first place.  And HMRC are interested in your taxable income not what your "salary" is.

    You do of course need to factor in any other taxable income such as interest or dividends.

    Part 2.
    A good starting point would be to look at your taxable pay to date on your January payslip and then see what your remaining (taxable) pay will add to that by 5 April given your recent pay rise.

    Unless there are changes in the March budget you will definitely need to sacrifice more than 8% in  the forthcoming tax year even if you have no other taxable income.
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