Salary above 100k. How best to reduce?

Noneforit999

Hi

My current projection with HMRC is £101500 and my tax code is 1010T suggesting it’s about right.

Basic is £79600
Bonus is (usually) 10% so £7960
On Call is £4500
Overtime is around £10k per year but varies

I have a pay rise incoming of approx £9k so it’s going to take me to £110k ish.

Obviously I am going to be paying effectively 60% tax on the £10k. I am not concerned about child free hours, we have no kids and no plans.

Currently I only pay 2% into my pension, my company pay 13% so I am thinking Increase pension payments?

We also need a new car, ours is aging and we were looking at something brand new so my company so a SS for EV cars, this could be a good option?

I ‘think’ if an EV is £800pm gross (£500 net), this would reduce my salary by £9600 but I have to add BIK on top which increases it a little again? 

Thanks 

Dazed_and_C0nfused

Noneforit999 said:

Hi

My current projection with HMRC is £101500 and my tax code is 1010T suggesting it’s about right.

Basic is £79600
Bonus is (usually) 10% so £7960
On Call is £4500
Overtime is around £10k per year but varies

I have a pay rise incoming of approx £9k so it’s going to take me to £110k ish.

Obviously I am going to be paying effectively 60% tax on the £10k. I am not concerned about child free hours, we have no kids and no plans.

Currently I only pay 2% into my pension, my company pay 13% so I am thinking Increase pension payments?

We also need a new car, ours is aging and we were looking at something brand new so my company so a SS for EV cars, this could be a good option?

I ‘think’ if an EV is £800pm gross (£500 net), this would reduce my salary by £9600 but I have to add BIK on top which increases it a little again? 

Thanks 

Yes, a company car benefit is part of your adjusted net income.  Which is what determines your Personal Allowance.

The three things often used are,

Work fewer hours
Extra pension (very common)
Gift Aid donations

It seems odd that they don't offer salary sacrifice for the pension if they are willing to do it for a car 🤔.  Maybe something you could try and explain the benefits of to them?

Albermarle

Currently I only pay 2% into my pension, my company pay 13% so I am thinking Increase pension payments?

You have a very generous employer as paying 13 % in the private sector is pretty high. However you are a high earner, and if you want to retire with a good income ( because this is what you have got used to) and maybe quite early, you need to be adding more than 15% to a pension, even if you are maybe only in your 30's.
The fact that you get substantial tax relief on your contributions, is also a reason to add more. 

Noneforit999

How would I know if my pension is salary sacrifice?

It shows as a minus figure on in the pre tax column my payslip for what I contribute. What my employer contributes shows in the post tax figure 

I’m considering doing both so upping my contribution to 4-5% so it would be 17-18% total and then getting an EV via SS.

Thanks

Dazed_and_C0nfused

Noneforit999 said:

How would I know if my pension is salary sacrifice?

It shows as a minus figure on in the pre tax column my payslip for what I contribute. What my employer contributes shows in the post tax figure 

I’m considering doing both so upping my contribution to 4-5% so it would be 17-18% total and then getting an EV via SS.

Thanks

Salary sacrifice means you don't contribute anything, you formally agree to a reduced salary.

And in return your employer contributes more into your pension.

Noneforit999

Dazed_and_C0nfused said:

Noneforit999 said:

How would I know if my pension is salary sacrifice?

It shows as a minus figure on in the pre tax column my payslip for what I contribute. What my employer contributes shows in the post tax figure 

I’m considering doing both so upping my contribution to 4-5% so it would be 17-18% total and then getting an EV via SS.

Thanks

Salary sacrifice means you don't contribute anything, you formally agree to a reduced salary.

And in return your employer contributes more into your pension.

I see, so that isn’t what I have then by the sound of it.

Regardless, I can increase the percentage I want to add

Sam_666

Why guess things? Why dont you call your pension dep and ask?
Maximizing pension contributions is best action.

Albermarle

Noneforit999 said:

How would I know if my pension is salary sacrifice?

It shows as a minus figure on in the pre tax column my payslip for what I contribute. What my employer contributes shows in the post tax figure 

I’m considering doing both so upping my contribution to 4-5% so it would be 17-18% total and then getting an EV via SS.

Thanks

From what you say, you are paying pension contributions by the confusingly named Net Pay Method.
This means the contributions come out before tax, so you are automatically getting tax relief on them.

To be sure ask your HR dept, OR sign in to your account with the pension provider.
There you should see each month contributions when they are added.
If there is only an employers contribution , then it is salary sacrifice.
If there are employer and employee contributions, with no tax relief added, it is Net Pay
If there are employer and employee contributions and tax relief added, it is 'Relief at source' but AFAIK this is  not very common for workplace pensions.

Noneforit999

So my pension provider only shows a payment from the employer and when I click the help icon it says 

Employer contributions into a pension

Any contributions that your employer pays into your pension do not attract income tax or National Insurance.

Salary exchange

If you have chosen to make contributions through salary exchange, your employer will make these as additional company contributions into your pension. This means they will be included with contributions ‘From your employer’

Nomunnofun1

Noneforit999 said:

So my pension provider only shows a payment from the employer and when I click the help icon it says 

Employer contributions into a pension

Any contributions that your employer pays into your pension do not attract income tax or National Insurance.

Salary exchange

If you have chosen to make contributions through salary exchange, your employer will make these as additional company contributions into your pension. This means they will be included with contributions ‘From your employer’

Check any payslip. Are you actually paying 2% contributions or is that what you are sacrificing?

HedgehogRulez

why dont you start putting £60k into your pension each year?