Increased pension contributions, take home gone up

[jurbie]

As per title really, I'm in the company pension scheme which is a salary sacrifice thing. It looked like I was going to creep into the 40% tax rate before the end of the year so I've been increasing my contributions to prevent that.

Obviously there is always a concern as to how much increased contributions will hit the all important net figure but this month my take home has shot up by £125. Is this normal or have payroll made a mistake? If it's normal I wish someone would have mentioned this years ago!

The pension is my current focus as I've neglected it for a while and for a long time I was only contributing 4%, I doubled this a few month ago which saw my deductions drop by £30 and my take home drop by £64.

The latest change is upping contributions to 12% and deductions have gone down by £250 but take home is up £125. The tax code is still the same and there are no other changes.

[PistonHead007]

Wait for next month's payslip and your take home will probably decrease a bit again. You get taxed each month based on projected earnings for the year. The change triggered this month to take a load less tax in recognition of lower projected earnings over the rest of the year. Next month it'll settle back to a steady figure closer to what you expect.

[jurbie]

That's good to know, thanks. I did receive an unexpected bonus at Christmas which has launched me towards the higher tax rate so I'm guessing that might have upset the projected earnings bit?

As long as all is in order and HMRC aren't going to be chasing me in the future then I'm happy with that.

[PistonHead007]

Yes, the bonus will be what's skewed it. Would have taken a chunk of tax off the bonus assuming you were going to carry on earning more each month and now it's giving some of that back.