Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • anon559
    • By anon559 16th May 19, 2:56 PM
    • 6Posts
    • 0Thanks
    anon559
    pay rise vs pension
    • #1
    • 16th May 19, 2:56 PM
    pay rise vs pension 16th May 19 at 2:56 PM
    Hello,

    My employer have offred me a payrise,
    i currently earn £46,500 and want to give me £55,000
    However i DONT WANT GO above 50k for the tax or becuase i will have to fill out a self
    cert.

    can i just ask them to continue to pay me £46,500 and anything over that they "want" to pay me put in my company pension, ?
Page 1
    • Linton
    • By Linton 16th May 19, 3:08 PM
    • 10,627 Posts
    • 10,982 Thanks
    Linton
    • #2
    • 16th May 19, 3:08 PM
    • #2
    • 16th May 19, 3:08 PM
    Hello,

    My employer have offred me a payrise,
    i currently earn £46,500 and want to give me £55,000
    However i DONT WANT GO above 50k for the tax or becuase i will have to fill out a self
    cert.

    can i just ask them to continue to pay me £46,500 and anything over that they "want" to pay me put in my company pension, ?
    Originally posted by anon559
    You can ask, they don’t have to agree. This is “salary sacrifice” which your employer may or may not support. The alternative to avoid being a higher rate tax payer is for you to make the higher pension contribution assuming your contributions are taken before the tax Is calculated. However you would still have to pay NI on the extra pay.
    • BakingC
    • By BakingC 16th May 19, 3:10 PM
    • 83 Posts
    • 87 Thanks
    BakingC
    • #3
    • 16th May 19, 3:10 PM
    • #3
    • 16th May 19, 3:10 PM
    If you company runs a pension scheme I am sure you could arrange additional contributions after the pay rise. If you were to negotiate the company paying an extra 20% of salary or whatever into your pension (if they would do that) instead of the pay rise then it removes the flexibility from you if you were to need the extra money in a year or so.

    If you cannot do additional contributions to the company pension then just start a private pension. You would have to do the tax return but as long as your income situation is relatively simple it is worth the effort to do yourself.
    • AnotherJoe
    • By AnotherJoe 16th May 19, 5:04 PM
    • 14,251 Posts
    • 16,960 Thanks
    AnotherJoe
    • #4
    • 16th May 19, 5:04 PM
    • #4
    • 16th May 19, 5:04 PM
    You would turn down an extra £8,500 a year in your pension to avoid filling an online form in? Jeez, pay an accountant £500 to do your tax and you'd still be £8k a year better off in the pension. Over the next say 30 years thats a Quarter of a Million Pounds. Probably half a million once you add even modest growth in.
    If that makes no sense to you you should delete your account on MoneySAVINGexpert and join PoorPensionerByChoice instead.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • cloud_dog
    • By cloud_dog 16th May 19, 5:56 PM
    • 4,241 Posts
    • 2,609 Thanks
    cloud_dog
    • #5
    • 16th May 19, 5:56 PM
    • #5
    • 16th May 19, 5:56 PM
    Hello,

    My employer have offred me a payrise,
    i currently earn £46,500 and want to give me £55,000
    However i DONT WANT GO above 50k for the tax or becuase i will have to fill out a self
    cert.

    can i just ask them to continue to pay me £46,500 and anything over that they "want" to pay me put in my company pension, ?
    Originally posted by anon559
    Why? The HRT threshold for 2019/20 is £50k.

    Go on, treat yourself, enjoy the extra £3.5k now and put £5k in your pension (which would only reduce your take-home pay by £3k); now that's magic
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Dazed and confused
    • By Dazed and confused 16th May 19, 7:43 PM
    • 4,738 Posts
    • 2,434 Thanks
    Dazed and confused
    • #6
    • 16th May 19, 7:43 PM
    • #6
    • 16th May 19, 7:43 PM
    Simply earning more than £50,000 is not something which means you need to complete a Self Assessment return.
    • BoGoF
    • By BoGoF 16th May 19, 8:07 PM
    • 4,393 Posts
    • 3,931 Thanks
    BoGoF
    • #7
    • 16th May 19, 8:07 PM
    • #7
    • 16th May 19, 8:07 PM
    Perhaps OP is referring to the child benefit charge when he says doesn't want to go above £50k
    • anon559
    • By anon559 16th May 19, 10:33 PM
    • 6 Posts
    • 0 Thanks
    anon559
    • #8
    • 16th May 19, 10:33 PM
    • #8
    • 16th May 19, 10:33 PM
    i must be missing somrthing here?
    say i take full £55,000 as a salary,
    i do claim child benefit so the drawbacks are
    1) will have to do a self cert
    2) will have a lower tax code becuase they will take some child benefit back.
    3) will pay 40% tax on anything over 50k take home

    say i stay on £46,500 and my employer pays the difference £8,500 into my pension
    benefits are:-
    1) wont have to do a self cert
    2) will not have a lower tax code
    3) will not pay 40% tax rate beacuse i am actually earning less than 50k
    4) can retire earlier or bigger pot when i retire
    5) can get tax free lump sum at retirement age tax free
    6) my employer will pay less tax and NI (so its good for them)
    7) thats 8500 extra in my pension, no tax on it going INTO my pension

    the benfets to pay the pension route outweigh the drawbacks to "taking the full amount take home"
    or am i wrong?
    Last edited by anon559; 16-05-2019 at 10:38 PM.
    • BoGoF
    • By BoGoF 17th May 19, 4:59 AM
    • 4,393 Posts
    • 3,931 Thanks
    BoGoF
    • #9
    • 17th May 19, 4:59 AM
    • #9
    • 17th May 19, 4:59 AM
    i must be missing somrthing here?
    say i take full £55,000 as a salary,
    i do claim child benefit so the drawbacks are
    1) will have to do a self cert
    2) will have a lower tax code becuase they will take some child benefit back.
    3) will pay 40% tax on anything over 50k take home

    say i stay on £46,500 and my employer pays the difference £8,500 into my pension
    benefits are:-
    1) wont have to do a self cert
    2) will not have a lower tax code
    3) will not pay 40% tax rate beacuse i am actually earning less than 50k
    4) can retire earlier or bigger pot when i retire
    5) can get tax free lump sum at retirement age tax free
    6) my employer will pay less tax and NI (so its good for them)
    7) thats 8500 extra in my pension, no tax on it going INTO my pension

    the benfets to pay the pension route outweigh the drawbacks to "taking the full amount take home"
    or am i wrong?
    Originally posted by anon559
    1) It's Self Asessment. It would be a 10 minute job.
    2) You can pay the Child Benefit charge and not have your tax code adjusted.
    3) You do realise that the 40% will only be applied to the portion of income above the higher rate threshold? This can be mitigated by paying some into a personal pension/paying gift aid.
    4) Possibly but nothing stopping you taking the increase and paying just enough into a personal pension/SIPP to take you below £50k.
    5) Certainly a plus if you don't need the money but see 4)
    6) Not sure how your employer would save tax? They would only save NI if salary sacrifice.
    7) True but as per 4) and 5) above.

    There is no right or wrong answer. It all depends on your retirement plan and when your employers scheme normal retirement age is. Paying into a personal pension/SIPP may give you more flexibilty.
    Last edited by BoGoF; 17-05-2019 at 5:51 AM.
    • cloud_dog
    • By cloud_dog 18th May 19, 8:58 AM
    • 4,241 Posts
    • 2,609 Thanks
    cloud_dog
    Op, you are missing something really quite significant... Salary Sacrifice is made by your company (on your behalf), the money is never attributed to you as earnings; hence the ability not to have to pay NI on that amount.

    So if you ensure the total of your pension contributions will be £5001, then your earnings will be £49999, as far as the tax man is concerned. Usual caveats apply regarding tax codes or othef BIK considerations.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,990Posts Today

4,035Users online

Martin's Twitter
  • This is a very useful and interesting, factual piece about what the PM's new Brexit proposals mean and how new they? https://t.co/qM1bCz6FZp

  • After two cancellations, I'm on the 3rd train back from Manch. Just heard its being rerouted as someone's taken tak? https://t.co/sRO4cvoWIw

  • RT @helen_undy: It's hard campaigning at the moment. Trying to cut through amid Brexit votes, protests & political resignations can feel fu?

  • Follow Martin