New job new salary: questions about taxes, pension and taxable benefits

[tibily]

Hello guys, I'll try to keep it short and to the point.

Let's imagine a salary of £60,000.

1st matter:If I try to calculate net pay with some of the websites available, they all give me the same result: ~£3,575 (some 3,575.31, others 3,575.01, but I guess it's okay and mostly due to rounding up numbers). However, I'd like to save 10% of the money that comes in each month in the pension scheme, and if I then add a 10% deduction for the pension (via salary sacrifice) to the salary calculators, the figures start to vary a bit:https://listentotaxman.com/ gives me monthly net pay of £3,275.31:

https://imgur.com/a/kJvWJ5O

https://www.thesalarycalculator.co.uk/ gives me monthly net pay of £3,291.26:

https://imgur.com/a/B61BB4X

Q: Okay it's not a huge difference, but which one is right (and why are they different, given that if I remove the 10% deduction the figures return to be the same across both websites)?

2nd matter:I am now being offered private medical insurance as benefit (which is opt-in, it's not provided by default), which is (from what I understand) paid for by the employer but with the owe on me for paying taxes on it. This is how it's worded: https://pastebin.com/3qtxwuhf

Key parts are:

1) If you receive this benefit as a Company Paid benefit then from April 2020 your Company funded PMI will be taxed directly through payroll so your Tax Code will no longer need to be adjusted for this benefit.

[...]

On your payslip you will see an entry “Taxable value for PMI” equal to the monthly value of your Private medical insurance as a taxable benefit. This is a notional figure, that will increase your taxable pay, to calculate the income tax and NI due via payroll. Please see the example below.

For example, Effective from June 2021 Company paid PMI Single cover currently cost £1,811.25 per annum (2021/2022).

The taxable amount of the benefit is £1,811.25 ÷ by 12 = £150.93 per month.

So, £150.93 monthly value of the PMI will be added to your taxable pay each month so that you can be taxed on this value.

Any additional premium you pay voluntarily from salary to add your dependants to cover is not subject to Benefit-in-Kind taxation.

2) If you buy this benefit then there is no further tax payable on the value.

Q1: Now, I think I'm not fully understanding how these hypothetical 150.93 additional taxable £ per month would affect my take-home pay. Any quick/easy way to find that? Also, would me being in the 40% tax bracket benefit of having PMI as per the above terms/ways, or would it make it worse?

Q2: The last point "2) If you buy this benefit then there is no further tax payable on the value." really confuses me. What does it mean? To me it sounds like it's the opposite of point "1)" in the quoted part above (1 makes you pay tax on it, 2 doesn't need tax to be paid...?), but I can't figure out the difference between "receiving this benefit as company paid benefit" and "buying this benefit". What does buy the benefit mean?

Thanks a lot, and sorry if some of these are silly questions

 

[bridgetbride]

@tibily Q1) it's essentially 150.93 multiplied by the highest rate of tax you pay. So if 40%, about £60 a month in tax.

Q2) if you "make good" the amount of the benefit in full, there is no benefit so no further tax charge. But you would still be taxable on the income used to "make good".

Is that the only difference between them? If so I can't understand why the employer would offer the two options. Except to see who was daft enough to pay £151 plus the tax already deducted (£151 being deducted from your net pay), versus a percentage of £151 in tax.

 

[tibily]

@bridgetbride Thank you for the reply!

Q1) Okay, so that costs more if I am in the highest tax bracket than if I was in the 20% one... so no advantages from a pure taxation POV.

Q2) Sorry what do you mean with "make good"? And yes, that seems to be the only difference mentioned...

In regards to the matter of the different salary calculator sites showing different figures when I add a 10% pension, would you know what's causing the numbers to change?

Thanks a lot!

!thanks

 

[bridgetbride]

@tibily Q2) by make good I mean pay your employer the value of the benefit. Say the benefit is valued at £2k, if you pay 1k towards it, that 1k would be deducted from your take home pay (after tax is already deducted) and you'd be taxed on the remaining 1k.

Unless it's salary sacrifice. If salary sacrifice then you're taxed on the cash equivalent of the benefit or the amount of salary given up, whichever is greater.

Pension will be because its calculating relief on pension contributions.

 

[tibily]

@bridgetbride !thanks