Help with earnings please

[Kathyan]

Someone retires from their present job and gets a pension of £1500 per month (before tax). How much would they have to earn to get a total income of £2400 per month (after tax)?

[mxyzptlk]

as an approximation £2500 pcm = 30000 pa. using tax rate of 20% would mean another 7500 pa is required. With income as shown of £18000pa another 19500 is required.

[mxyzptlk]

Forgot to take into account the amount of tax already taken on the £18000, but i'm sure you get the drift.

[dzug2]

Also depends on whether they are eligible for age allowance or not.

[Kathyan]

mxyzptlk: Thanks1!
Dzug: He's nearly 55!

[ubasses]

Don't forget any income earned over £139 pw will be subject to national insurance as he hasn't reached state retirment age yet.

[twix123]

Ubasses reply is not strictly correct as there will not be any NI deduction in respect of the pension.

Assuming the person has the basic tax allowance of £7475 per year and only pays basic rate tax at 20%, the gross pension of £1500 will give a monthly income of £1325, allowing for all the tax relief being given against the pension.

To get an income of £2400 per month net, a further £1075 is required. A further monthly income of £1500 gross would suffer £108 NI and £300 Income Tax (if calculated at basic rate - Code BR), leaving a net figure of £1092, which with the pension comes to £2417 per month.

Therefore they would have to earn just under £18,000 per year extra (£1500 per month or £346 per week).