Help with calculations on a new job - is it worth it?
Discussion
I have been offered a potential new job and having done some calculations I am not sure it is worth moving on despite the extra money I would be earning. My reasoning is below but I would appreciate peoples experience and comments, and a double check if I have gone wrong anywhere. Hopefully this all makes sense 
The new job would mean a pay rise of 28% which would move me from the lower rate tax payer band to the 40% rate band (i.e. over £32k). My current employment includes a company car, the new job does not. We have no savings to purchase a car as we have just purchased and refurbished a house. (Our mortgage is fixed). I would therefore require a loan to purchase a family car. We have one newborn child and would potentially have another within the next few years. We will also soon have a dog. Therefore I need to ensure that moving job does not leave me out of pocket in the short term.
I have utilised a couple of salary calculator type websites in order to gain some figures. At the likely offered wage I would make an extra £340 per month nett on what I earn now, (£4080/yr).
I would require to spend approx £660 of that to buy six days extra holiday from the company to match what I have now. (Currently get 26 days + BH's compared to 20 days + BH's).
I would need to take out a loan on a car. I could look at circa £6k models at 5-8 years age and payback £215/mth over three years (£2580/yr) or a circa £12k model at 1-2 years age and warranty and pay back £230/mth over five years (£2760/yr).
Vehicle running costs budgeted at:
Insurance £450/yr
Tax £170/yr
MOT £40/yr
Tyres £160/yr
Service £200/yr
Repairs £500/yr
This equates to £1520/yr
This would leave me ~£500 per year in debt. I figure the break even salary to be a 35% rise which may be too rich to negotiate. (The 28% is already negotiated up to take account of requiring a car £4k allowance allowed for, and the extra holiday, plus £4k extra – which is the £4080 figure).
The new work would be basically the same as what I am doing now, more time in the office (not necessarily a good thing, and possibly more time away from home after the first year which I am not so keen on with a young family).Conversely a higher salary would allow more scope for a higher salary when moving jobs in the future and would put more into the pension pot. It would also pay off the student loan quicker.
I am also aware that should the unforeseen happen then I would not get statutory redundancy pay at the new employer in the first year, whereas I have 5 years employment with my current company.
Sorry for the long post!
The new job would mean a pay rise of 28% which would move me from the lower rate tax payer band to the 40% rate band (i.e. over £32k). My current employment includes a company car, the new job does not. We have no savings to purchase a car as we have just purchased and refurbished a house. (Our mortgage is fixed). I would therefore require a loan to purchase a family car. We have one newborn child and would potentially have another within the next few years. We will also soon have a dog. Therefore I need to ensure that moving job does not leave me out of pocket in the short term.
I have utilised a couple of salary calculator type websites in order to gain some figures. At the likely offered wage I would make an extra £340 per month nett on what I earn now, (£4080/yr).
I would require to spend approx £660 of that to buy six days extra holiday from the company to match what I have now. (Currently get 26 days + BH's compared to 20 days + BH's).
I would need to take out a loan on a car. I could look at circa £6k models at 5-8 years age and payback £215/mth over three years (£2580/yr) or a circa £12k model at 1-2 years age and warranty and pay back £230/mth over five years (£2760/yr).
Vehicle running costs budgeted at:
Insurance £450/yr
Tax £170/yr
MOT £40/yr
Tyres £160/yr
Service £200/yr
Repairs £500/yr
This equates to £1520/yr
This would leave me ~£500 per year in debt. I figure the break even salary to be a 35% rise which may be too rich to negotiate. (The 28% is already negotiated up to take account of requiring a car £4k allowance allowed for, and the extra holiday, plus £4k extra – which is the £4080 figure).
The new work would be basically the same as what I am doing now, more time in the office (not necessarily a good thing, and possibly more time away from home after the first year which I am not so keen on with a young family).Conversely a higher salary would allow more scope for a higher salary when moving jobs in the future and would put more into the pension pot. It would also pay off the student loan quicker.
I am also aware that should the unforeseen happen then I would not get statutory redundancy pay at the new employer in the first year, whereas I have 5 years employment with my current company.
Sorry for the long post!
skip_1 said:
The new job would mean a pay rise of 28% which would move me from the lower rate tax payer band to the 40% rate band (i.e. over £32k).
Just to check as I'm not sure from your post. Are you calculating the 40% portion of your tax over £32, 010 or £32, 010 + PA £9, 440? 40% tax is payable on the portion over £42, 450.
Skip_1 on first read this does not sound a good offer - based on £'s alone. It appears as if "the package" is nearly the same, if not inferior?
Your prospective employer must have known over your company car and holiday allowance and I would expect them to at least match the car or offer equivalent and then offer you a higher wage to secure you.
There are a whole heap of other things to consider eg
pension
career prospects
size of organisation
do you pay for your own fuel
sick pay
paternity rules
trading history and strategy
are you happy where you are
why did you apply in the first place
etc
etc
Remember money/package is only one of the factors when considering a career move.
Appreciate it is a difficult decision but if you are considering it for the package alone - it does not seem to stack up.
Best of luck.
Your prospective employer must have known over your company car and holiday allowance and I would expect them to at least match the car or offer equivalent and then offer you a higher wage to secure you.
There are a whole heap of other things to consider eg
pension
career prospects
size of organisation
do you pay for your own fuel
sick pay
paternity rules
trading history and strategy
are you happy where you are
why did you apply in the first place
etc
etc
Remember money/package is only one of the factors when considering a career move.
Appreciate it is a difficult decision but if you are considering it for the package alone - it does not seem to stack up.
Best of luck.
Laplace said:
Just to check as I'm not sure from your post. Are you calculating the 40% portion of your tax over £32, 010 or £32, 010 + PA £9, 440?
40% tax is payable on the portion over £42, 450.
I have used the online tax calculators that do it automatically. As far as I am aware I'd pay 40% tax on the portion of any salary over £32k. I am not clear if that is after the tax free allowance of £9k is subtracted first.40% tax is payable on the portion over £42, 450.
BE57 TOY said:
It sounds like your current employer offers a much better all round package. Can you negoutate a payrise with them instead?
T5R+ said:
Skip_1 on first read this does not sound a good offer - based on £'s alone. It appears as if "the package" is nearly the same, if not inferior?
Your prospective employer must have known over your company car and holiday allowance and I would expect them to at least match the car or offer equivalent and then offer you a higher wage to secure you.
There are a whole heap of other things to consider eg
pension
career prospects
size of organisation
do you pay for your own fuel
sick pay
paternity rules
trading history and strategy
are you happy where you are
why did you apply in the first place
etc
etc
Remember money/package is only one of the factors when considering a career move.
Appreciate it is a difficult decision but if you are considering it for the package alone - it does not seem to stack up.
Best of luck.
Thanks. I was thinking along the lines of my current employers deal being better at the moment. Maybe in a few years if I had savings to negate the need for taking a loan the prospective employers deal could be better. The work is broadly similar, the prospective company is bigger and possibly growing more. As you have mentioned though I am happy where I am and enjoy my current mix of work. I didn't apply for the other job as such, was approached via an agency and thought it would be a good idea to at least see what was on offer.Your prospective employer must have known over your company car and holiday allowance and I would expect them to at least match the car or offer equivalent and then offer you a higher wage to secure you.
There are a whole heap of other things to consider eg
pension
career prospects
size of organisation
do you pay for your own fuel
sick pay
paternity rules
trading history and strategy
are you happy where you are
why did you apply in the first place
etc
etc
Remember money/package is only one of the factors when considering a career move.
Appreciate it is a difficult decision but if you are considering it for the package alone - it does not seem to stack up.
Best of luck.
I am not sure how much further I can negotiate with the new company, they don't provide company cars as a policy for instance so it would all be monetary. Will need to think further about career progression as this is where the companies may differ.
If my current employer could offer a payrise of maybe 10-15% then I would definitely stay, might be worth trying as they do plough a lot of money into training us.
You only pay the higher rate of income tax (40%) on earnings above £41,451 (£9440 personal allowance + £32,011).
Also why do you need to take out a £6k-12k loan for a second hand car? There are many PCP deals now available on brand new cars where you put down only £199 deposit, then £199 for say 36 months. This gives you a fixed monthly payment for a brand new car, no road tax required for the first year, no MOTs required for the whole term and probably no repair bills other than servicing.
Also why do you need to take out a £6k-12k loan for a second hand car? There are many PCP deals now available on brand new cars where you put down only £199 deposit, then £199 for say 36 months. This gives you a fixed monthly payment for a brand new car, no road tax required for the first year, no MOTs required for the whole term and probably no repair bills other than servicing.
Cheers all. Company car is currently circa £600 per year.
If I went the PCP route of approx 200 p/m and after taking off the 660 for holidays I would only be around £80-110p/m up once insurance and servicing is factored in.
Will need to have a careful think about career prospects in each role as this seems to be the clincher.
If I went the PCP route of approx 200 p/m and after taking off the 660 for holidays I would only be around £80-110p/m up once insurance and servicing is factored in.
Will need to have a careful think about career prospects in each role as this seems to be the clincher.
skip_1 said:
Cheers all. Company car is currently circa £600 per year.
If I went the PCP route of approx 200 p/m and after taking off the 660 for holidays I would only be around £80-110p/m up once insurance and servicing is factored in.
Will need to have a careful think about career prospects in each role as this seems to be the clincher.
That wouldn't be enough for me to move employers, unless I was partucuarly unhappy where I was. If I went the PCP route of approx 200 p/m and after taking off the 660 for holidays I would only be around £80-110p/m up once insurance and servicing is factored in.
Will need to have a careful think about career prospects in each role as this seems to be the clincher.
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