Salary Package Advice

Scotslad87

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

Scotslad87

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland
Base Annual Salary: £95000
Monthly Car Allowance: £535
Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

Keep_pedalling

Pension contributions will reduce the amount of tax you pay but will also reduce the amount of take home income. The main payback will be the increased amount of income you will have once you retire. 

Emmia

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland
Base Annual Salary: £95000
Monthly Car Allowance: £535
Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

I think you're in the wrong part of the forum. This board is for people in debt who want to be debt free... I presume you're not in financial difficulties?

Edit: Try the "Cutting Tax" board (which I see this has been moved to)

https://forums.moneysavingexpert.com/categories/cutting-tax

Dazed_and_C0nfused

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

Scotslad87

Dazed_and_C0nfused said:

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

I don't think that's necessarily true, because once you earn over a certain amount, you lose your personal tax allowance and so, by making pension contribution to bring the salary under that threshold ... You will take home more.

eskbanker

Scotslad87 said:

Dazed_and_C0nfused said:

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

I don't think that's necessarily true, because once you earn over a certain amount, you lose your personal tax allowance and so, by making pension contribution to bring the salary under that threshold ... You will take home more.

Care to share a worked example of how that could ever happen?

Scotslad87

eskbanker said:

Scotslad87 said:

Dazed_and_C0nfused said:

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

I don't think that's necessarily true, because once you earn over a certain amount, you lose your personal tax allowance and so, by making pension contribution to bring the salary under that threshold ... You will take home more.

Care to share a worked example of how that could ever happen?

Because your personal tax allowance goes from being £0 to over £12k?

eskbanker

Scotslad87 said:

eskbanker said:

Scotslad87 said:

Dazed_and_C0nfused said:

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

I don't think that's necessarily true, because once you earn over a certain amount, you lose your personal tax allowance and so, by making pension contribution to bring the salary under that threshold ... You will take home more.

Care to share a worked example of how that could ever happen?

Because your personal tax allowance goes from being £0 to over £12k?

Only if you reduce your income by £25K!  If you reduce your income from £125K to £100K, you'd get your personal allowance back but ultimately your take-home pay would be £10K lower....

Grumpy_chap

Scotslad87 said:

eskbanker said:

Scotslad87 said:

Dazed_and_C0nfused said:

Scotslad87 said:

Dear Forum,

Interested to know everyone's thoughts on how best to maximise monthly take home pay based on the following;

Location: Scotland

Base Annual Salary: £95000

Monthly Car Allowance: £535

Annual Bonus: £20000 (Paid as a lump sum in May)

What is the best monthly pension contribution to make to maximise take home pay, and reduce tax liability on the above scenario?

You are really asking for two different things.

Maximising take home pay would mean smallest possible deductions i.e. less into your pension.

Reducing tax liability would mean you need to put more into your pension.  

So which is more important?

Or is there a specific scenario you want to avoid, such as loss of your Personal Allowance?

I don't think that's necessarily true, because once you earn over a certain amount, you lose your personal tax allowance and so, by making pension contribution to bring the salary under that threshold ... You will take home more.

Care to share a worked example of how that could ever happen?

Because your personal tax allowance goes from being £0 to over £12k?

Even in that band the marginal tax rate (England) is 62% (60% income tax plus 2% NI) so, for every £1 extra income you still gain 38 pence extra take home pay.

Even if you are considering the loss of tax free childcare hours, your take home pay still increases for every £1 earned. 

Given your income level and the need to complete SA tax return, you may be well advised to take professional advice (Accountant / IFA) given you are conflating take maximum home pay and reduced tax liability.
In the immediate term, the two are not necessarily compatible.

TheSpectator

Putting the OP's wrong assumptions to one side, as 45% tax is charged on income over £75k in Scotland you should be looking to mitigate this as far as possible.