Pension salary sacrifice + Tax
Discussion
Probably a stupid question, but I'd regret not asking it and losing out on funds !
I am a higher rate tax earner and enrolled on my employers pension scheme
My portion of the pension contribution is 8% paid through salary sacrifice.
On my pay slip I can see what looks like the my contribution being deducted from my monthly pay before any tax deductions are calculated (guess that's why they call it salary sacrifice!) so I am presuming that there is nothing for me to claim back from the tax man as i haven't paid tax on any of the contribution I have made.
Is this correct?
I am a higher rate tax earner and enrolled on my employers pension scheme
My portion of the pension contribution is 8% paid through salary sacrifice.
On my pay slip I can see what looks like the my contribution being deducted from my monthly pay before any tax deductions are calculated (guess that's why they call it salary sacrifice!) so I am presuming that there is nothing for me to claim back from the tax man as i haven't paid tax on any of the contribution I have made.
Is this correct?
correct.
Same at my place. The pension deduction is taken directly from the Gross, so whatever rate taxpater you are is irrelevant.
If you were paying it out of net and just getting the 20% relief but were a 40% payer you would have a claim for the difference.
Our lot take all this sort of stuff off the gross. Each month i also get £30 added to the gross and £30 taken off the net for my healthcare.
They also give you relief on mileage on the payslip by some funny system.
They pay AFR rates (about 14ppm for my burner) through expenses. Then they reduce your allowance by the difference (40ppm-14ppm=26ppm) and then give it you back without the NI and tax deducted as an expenses item albeit on the payrun.
Keeps everything of the P11D
Same at my place. The pension deduction is taken directly from the Gross, so whatever rate taxpater you are is irrelevant.
If you were paying it out of net and just getting the 20% relief but were a 40% payer you would have a claim for the difference.
Our lot take all this sort of stuff off the gross. Each month i also get £30 added to the gross and £30 taken off the net for my healthcare.
They also give you relief on mileage on the payslip by some funny system.
They pay AFR rates (about 14ppm for my burner) through expenses. Then they reduce your allowance by the difference (40ppm-14ppm=26ppm) and then give it you back without the NI and tax deducted as an expenses item albeit on the payrun.
Keeps everything of the P11D
musclecarmad said:
your employer should be paying it if it's salary sacrifice. you have given up some salary so your employer pays money into your pension. why are you paying anything?
my lot show a 'reference salary' then there's a list of +'s and -'s for pension, hc, expenses adjust, cycle to work, overtime, etcmusclecarmad said:
your employer should be paying it if it's salary sacrifice. you have given up some salary so your employer pays money into your pension. why are you paying anything?
This...Sal sacrafice means you get paid less as a SALARY...but the firm puts into a pension for you.
Different to the firm deducting from pay.
By agreeing to reduce your salary, the deduction goes straight into your pension plan without you having to pay NI contributions. But your employer also avoids paying NI contributions, and a good employer might agree to pay some or all of this saving into your pension plan too. Either way, it's a good thing for you.
Employers love salary sacrifice as they get to make it sound like they're doing you a big favour - I've seen several word a change to adopting the system as if the company is contributing more to your pension, quietly forgetting to mention the savings they make. One even reduced their actual contribution by half the employee's NI savings, and gave themselves an almighty pat on the back in the process. Pretty cheeky if you ask me.
I have serious concerns about Salary Sacrifice schemes. They do indeed save companies money - and they are often reluctant to admit to employees just how much THEY are benefitting from adopting such schemes.
There are also ramifications for employees regarding their overall salaries i.e. what is their actual Gross Salary?SAnd Gross Salary level do they now use for negotiation purposes? What Gross Salary level do they use when applying for loans or other financial products from third parties.
The main thing is that any employee entering such a scheme goes in with their eyes open and are fully aware of how the scheme works and some of tghe potential pitfalls associated with them.
There are also ramifications for employees regarding their overall salaries i.e. what is their actual Gross Salary?SAnd Gross Salary level do they now use for negotiation purposes? What Gross Salary level do they use when applying for loans or other financial products from third parties.
The main thing is that any employee entering such a scheme goes in with their eyes open and are fully aware of how the scheme works and some of tghe potential pitfalls associated with them.
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