Salary Exchange scheme for your work pension

Status
Not open for further replies.

Ben Gardner

Winger
Bit of a minefield, this like - even with a Q&A sesh arranged by HR (you wadn't)

Is there salary threshold where this actually works to your fiscal advantage, or is it just for higher tax-bracket type folk?

From what I gather, the main advantage is saving a bit by paying less NIC but not less tax.

Thanks in advance
 


Bit of a minefield, this like - even with a Q&A sesh arranged by HR (you wadn't)

Is there salary threshold where this actually works to your fiscal advantage, or is it just for higher tax-bracket type folk?

From what I gather, the main advantage is saving a bit by paying less NIC but not less tax.

Thanks in advance

Sounds about right.
 
Bit of a minefield, this like - even with a Q&A sesh arranged by HR (you wadn't)

Is there salary threshold where this actually works to your fiscal advantage, or is it just for higher tax-bracket type folk?

From what I gather, the main advantage is saving a bit by paying less NIC but not less tax.

Thanks in advance

Salary sacrifice lowers your tax and NI as the deduction is made from your gross salary if it is pension.
 
Thank you. Not as complicated as some make out, then?!

If you're bonused check what it means for that.

I take a season ticket travel loan and it knackered the amount of bonus I got this year - so if you're losing a load to throw at your pension check to see if you bonus is paid as a % of you salary before sign up...as you may get a lot less than you thought.
 
Bit of a minefield, this like - even with a Q&A sesh arranged by HR (you wadn't)

Is there salary threshold where this actually works to your fiscal advantage, or is it just for higher tax-bracket type folk?

From what I gather, the main advantage is saving a bit by paying less NIC but not less tax.

Thanks in advance

I probably wad like. Pics?
 
You don't pay tax or NI on the money you pay into your pension.

So if you are a 40% taxpayer then putting £100 into your pension will only reduce your net pay by £60, because you've avoided £40 tax.

You do pay income tax on your pension income when you come to draw on your pension however, so you are really only delaying the tax payment.

Assuming your income has dropped by the time you reach retirement, it may mean paying less overall, but that will depend on individual circumstances.
 
You already don't pay tax on pension contributions, so that's why it makes no difference to put the money in via salary sacrifice.

As I understand it, the benefit is that you don't pay your 10%ish NI on that money, and your company don't have to pay their 13% ish either. So you'd imagine the company are bribing you with a bit extra bonus?

Remember, your salary is lower - so if they currently match up to, say, 6%, then that's going to be less than 6% via salary sacrifice. Its also more complicated if you are in a defined benefit scheme, as your average/final salary will be lower
 
You don't pay tax or NI on the money you pay into your pension.

So if you are a 40% taxpayer then putting £100 into your pension will only reduce your net pay by £60, because you've avoided £40 tax.

You do pay income tax on your pension income when you come to draw on your pension however, so you are really only delaying the tax payment.

Assuming your income has dropped by the time you reach retirement, it may mean paying less overall, but that will depend on individual circumstances.
This is incorrect. Salary sacrifice is the means by which NI is saved. @Ben Gardner should check if his employer is also paying their NI saving into his pension (some don't).
 
It can be a great way to cheat the benefit system into thinking you earn less thus qualifying for welfare. I know a lass who puts in about half of her salary into her pension via salary sacrifice so she can get free prescriptions and more working tax credits. Greedy cow.
 
  • Like
Reactions: PTR
It can be a great way to cheat the benefit system into thinking you earn less thus qualifying for welfare. I know a lass who puts in about half of her salary into her pension via salary sacrifice so she can get free prescriptions and more working tax credits. Greedy cow.
She's not American, is she?
 
It can be a great way to cheat the benefit system into thinking you earn less thus qualifying for welfare. I know a lass who puts in about half of her salary into her pension via salary sacrifice so she can get free prescriptions and more working tax credits. Greedy cow.
Thanks for the advice.
 
Status
Not open for further replies.

Back
Top