Job offer - £95k - negotiating up and 60% tax bracket

[redrabbit29]

Hey

Offer is

£95k salary
15% bonus (£14,250)
3% pension and they pay in 6%

They say salary is negotiable so I was going to ask for £110k but then read about the 60% tax bracket which I never knew about.

I'm assuming this increase would still be worth it even if I get taxed highly?

I also read that I can ask for some amounts over the £100k to go straight into pension. I assume I can do this but wasn't sure if it was pension dependent and what the company offer?

Still reading up but I'm rubbish at this kind of thing so just wanted to ask here whilst I continue researching.

Thank you

[gangzoom]

redrabbit29 said:

They say salary is negotiable so I was going to ask for £110k but then read about the 60% tax bracket which I never knew about.

Roughly speaking i think you are out of the 60% marginal tax burden at over £120k, than you have the 45% addtional tax rate to aim for at £150k.

Rather than 'worry' about earning over £100k, I'm focused on getting to the £150k threshold. Unless you think you are at the top of your earning potential already, aiming higher/next step is never a bad thing to do.

[Royal Jelly]

To answer your 60% question;

You can throw your income into a pension scheme to bring your taxable income down.

Either through a salary sacrifice, or if unavailable through your employer, through a SIPP.

You can put up to 40k a year into a pension, so if you made 110k, you can bring your taxable income down to 70.

[johnnyBv8]

It kicks in at £100k of taxable salary (ie after pension contributions etc), so at the salary offered you may have very little that gets taxed at 60% even with bonus.

In terms of the higher salary request, you’ll still only be taxed on the element from £100k taxable (from memory until around £123k) - so as galling as it is, at some point you’re just going to have to power through the 60% range and get back to 40% for a while when you come out the other side!

[dingg]

Royal Jelly said:

To answer your 60% question;

You can throw your income into a pension scheme to bring your taxable income down.

Either through a salary sacrifice, or if unavailable through your employer, through a SIPP.

You can put up to 40k a year into a pension, so if you made 110k, you can bring your taxable income down to 70.

Remember that the 40k is total into the pension, so includes the employer contributions.

[BERGS2]

Royal Jelly said:

To answer your 60% question;

You can throw your income into a pension scheme to bring your taxable income down.

Either through a salary sacrifice, or if unavailable through your employer, through a SIPP.

You can put up to 40k a year into a pension, so if you made 110k, you can bring your taxable income down to 70.

This.

[Carbon Sasquatch]

And your bonus counts as income - so you're already at 110.

As above - there's never usually a downside to earning more, so get the most you can and worry about the tax later.

If it's decent increase for you, then I'd definitely be looking to max out the pension contributions. Your older self will thank you in years to come.

[Caddyshack]

Royal Jelly said:

To answer your 60% question;

You can throw your income into a pension scheme to bring your taxable income down.

Either through a salary sacrifice, or if unavailable through your employer, through a SIPP.

You can put up to 40k a year into a pension, so if you made 110k, you can bring your taxable income down to 70.

Doesn’t need to be a SIPP.


Never let the tax tail wag the income dog, It’s a diminishing return but I would still take £100m even if I had to pay 60% tax on it….just don’t dwell on the payslip tax deductions.

[Sporky]

Caddyshack said:

I would still take £100m even if I had to pay 60% tax on it….just don’t dwell on the payslip tax deductions.

I think most of us would take £100m.

[T6 vanman]

First world problems thread this way >>>>>>>>>>>>>


Looks despondently at my life choices

[Caddyshack]

Sporky said:

Caddyshack said:

I would still take £100m even if I had to pay 60% tax on it….just don’t dwell on the payslip tax deductions.

I think most of us would take £100m.

Of course we would, which is also why the OP should not worry about a 90k job becoming a 120k or 160k job.

[WhiskyDisco]

Similar decisions of a worker having 4 kids, earning £50k but offered a £10k wage rise for a big jump in responsibilities -> working overtime every Saturday maybe.

£10,000 wage rise take home = £2,414

Difficult decisions

[fourstardan]

Is that bonus guaranteed?

I'd be taking what I could regardless of tax....tax brackets change as well.

[WhiskyDisco]

What you might have considered £1 before is now £2

[chrisch77]

WhiskyDisco said:

Similar decisions of a worker having 4 kids, earning £50k but offered a £10k wage rise for a big jump in responsibilities -> working overtime every Saturday maybe.

£10,000 wage rise take home = £2,414

Difficult decisions

Yet again, people don’t understand the income tax system. Getting a pay rise that puts you into the next bracket only affects the incremental amount above the tax threshold. It does NOT mean the higher tax rate is applied to your whole salary!

Therefore, regardless of which tax band a salary rise pushes you into you will always be ‘better off’ than on the lower salary.

In your case going 10k over the 50k will mean tax at 40% on 10k and the rest (minus tax free allowance 12.5k) of at basic rate of 20% exactly as per your existing salary. Yes, there will be a proportional increase in NI contributions, pension contributions etc but it isn’t as bad as you made out above.

https://www.gov.uk/income-tax-rates

I suspect the OP is also making this mistake.

[cliffords]

I will get in trouble for this observation.
It's a highly paid job being offered to a person who can't grasp simple tax calculations ?

[ScottJB]

chrisch77 said:

WhiskyDisco said:

Similar decisions of a worker having 4 kids, earning £50k but offered a £10k wage rise for a big jump in responsibilities -> working overtime every Saturday maybe.

£10,000 wage rise take home = £2,414

Difficult decisions

Yet again, people don’t understand the income tax system. Getting a pay rise that puts you into the next bracket only affects the incremental amount above the tax threshold. It does NOT mean the higher tax rate is applied to your whole salary!

Therefore, regardless of which tax band a salary rise pushes you into you will always be ‘better off’ than on the lower salary.

In your case going 10k over the 50k will mean tax at 40% on 10k and the rest (minus tax free allowance 12.5k) of at basic rate of 20% exactly as per your existing salary. Yes, there will be a proportional increase in NI contributions, pension contributions etc but it isn’t as bad as you made out above.

https://www.gov.uk/income-tax-rates

I suspect the OP is also making this mistake.

I suspect WhiskeyDisco is factoring in HICBC.

[Tomanybikes]

cliffords said:

I will get in trouble for this observation.
It's a highly paid job being offered to a person who can't grasp simple tax calculations ?

If it’s oil and gas then starting the post with “hey” means he is above average intelligence.

[I 8 a 4RE]

Try to take as much on the base as possible and don’t try to push it into benefits / bonus / pension for tax reasons.

Base pay compounds with annual increases, others may not.

[Crumpet]

chrisch77 said:

WhiskyDisco said:

Similar decisions of a worker having 4 kids, earning £50k but offered a £10k wage rise for a big jump in responsibilities -> working overtime every Saturday maybe.

£10,000 wage rise take home = £2,414

Difficult decisions

Yet again, people don’t understand the income tax system. Getting a pay rise that puts you into the next bracket only affects the incremental amount above the tax threshold. It does NOT mean the higher tax rate is applied to your whole salary!

Therefore, regardless of which tax band a salary rise pushes you into you will always be ‘better off’ than on the lower salary.

In your case going 10k over the 50k will mean tax at 40% on 10k and the rest (minus tax free allowance 12.5k) of at basic rate of 20% exactly as per your existing salary. Yes, there will be a proportional increase in NI contributions, pension contributions etc but it isn’t as bad as you made out above.

https://www.gov.uk/income-tax-rates

I suspect the OP is also making this mistake.

Except that he’s very much correct in this case. A year of child benefits for four kids is nearly £3400, which you’d fully lose at 60k. Plus over £4000 disappears in tax and NI and he’s correct that you’d see less than £2500 of your extra £10k. A ridiculous situation.

That being said, you’d be wise to take the pay rise and salary sacrifice the extra £10k into a pension; it’s just sensible planning for the future.