Salary sacrifice proposals by Labour
Discussion
The government s plan to cap the tax benefits of salary sacrifice schemes will erode trust in the savings system and strike a reckless hit on businesses and jobs, according to opposition parties and pensions experts.
In salary sacrifice schemes, staff agree to give up some of their wages in return for other benefits, typically pension contributions. This lowers their headline salary so they and their employer pay less national insurance. Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year, and the tax relief is available on the whole of that contribution. But Reeves is set to introduce a new threshold of £2,000, above which contributions will incur national insurance at the usual rates 8 per cent on salaries under £50,270 and 2 per cent on income above that. The Treasury estimates the move will raise £2bn per year. It would be the second national insurance blow to businesses after employers contribution rate was raised to 15 per cent in April and the threshold at which it is levied was lowered in a move that opponents dubbed the jobs tax
From the times
In salary sacrifice schemes, staff agree to give up some of their wages in return for other benefits, typically pension contributions. This lowers their headline salary so they and their employer pay less national insurance. Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year, and the tax relief is available on the whole of that contribution. But Reeves is set to introduce a new threshold of £2,000, above which contributions will incur national insurance at the usual rates 8 per cent on salaries under £50,270 and 2 per cent on income above that. The Treasury estimates the move will raise £2bn per year. It would be the second national insurance blow to businesses after employers contribution rate was raised to 15 per cent in April and the threshold at which it is levied was lowered in a move that opponents dubbed the jobs tax
From the times
Sheepshanks said:
Racehorse said:
Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year,
Well some employees can. Not all employers operate salary sacrifice.Racehorse said:
contributions will incur national insurance at the usual rates
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
Why would hit lower earners more?Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
But yes would hit pension savings for many
Edited by Racehorse on Friday 14th November 21:42
Racehorse said:
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
Why would hit lower earners more?Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
But yes would hit pension savings for many
Edited by Racehorse on Friday 14th November 21:42
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn’t actually sound a bad idea…..
I’d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don’t think it’ll hit the pocket of the average working man much at all.
I’d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don’t think it’ll hit the pocket of the average working man much at all.
AndyAudi said:
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn t actually sound a bad idea ..
I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
The wealthy ‘working man’ you mean?I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
As I said on another thread earlier, the amount of tax a high PAYE earner is paying completes dwarfs someone on £40k. Let’s not forget that those of us using Sal Sac in a big way will be paying income tax again on that money when we retire, it’s not a complete gimme.
There needs to be some sort of carrot for people or what’s the point.
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
And a pension contribution of someone in the private sector of 5% (2k being 5% of £40k) is more than sufficient, where those in the public services need 27% state contribution, and 10% personal contribution.Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
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