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My company have offered us a Salary Sacrifice scheme where we take a cut in salary but the company pays the sacrificed salary as additional contributions into the pension plan. The net, net, net is I save on employees NI and the company pays less employer NI. I've read that most employers split the employer NI savings 50/50 with the employee (so far it's unclear what we will get), some give 100% to the employee and some 0%. Has anyone been through this process, how much did you get of the employer savings? And if possible can you give your company name?
Cheers
Ill be sacrificing 100% of my salary in 3 weeks.
Squeaky bum time!!
😯
I use the pension salary sacrifice at my current company, and will be doing so with my new employer as well.
I chose it initially for the NI savings, but now it will help keep my salary below the upper tax threshold, which as there is discussion about kids in the future would allow us to keep child benefit.
Neither of the companies have had any splitting of the companies NI savings though.
I use it to whack a chunk per month into my pension, reduces my taxable salary to well below nasty 40% levels. The company give an uplift of 2% which is better than nowt I guess.
allthepies - tax is paid after pension contributions have been take out so that makes no difference to the 40% tax rate. You pay 2% NI over £42,475 so the amount you would be saving without a contribution from the employer would be naff all.
Pembo - sorry you'll have to explain further.
For example, if someone earnt say £60K but contributed £30K to their pension then their taxable salary is effectively £30K yes ? So would pay 20% tax on that post-pension amount ?
Yeah, sorry I was specifically referring to the Salary Sacrifice scheme not bog standard pension contributions.
Errr, so was I 🙂 My example is a salary sacrifice one.
Not sure it is ATP, Salary Sacrifice is all about NI savings. I currently contribute 6% to the pension plan which attracts NI but obviously not income tax. By taking a 6% 'cut' in salary and getting the company to put that 6% in the pension plan means no difference to my tax but saves me a little on NI and the company a bit more on NI.
OK, our scheme must be different then as the salary sacrifice contributions are exactly that, a salary sacrifice. So my taxable income is my gross income - salary sacrifice (ignoring personal allowances etc so as not to confuse things). Handy as you can do things as per funkynick above i.e. reduce your effective taxable salary to below the 40% threshold so as to continue receiving child benefit.
I think you are both talking the same thing... the only benefit to the employee with a pension salary sacrifice, aside from the child benefit thing, is the NI saving on the amount of salary which is sacrificed. There is no tax saving as the pension contributions are taken after NI but before tax.
Salary sacrifice for other things, like bikes/cars/etc, attract savings on both NI and tax.
So my taxable income is my gross income - salary sacrifice
No. Taxable income is gross income - salary sacrifice - pension contributions. Pension contributions are non-taxable whether they're salary sacrifice or not, hence salary sacrificing them makes no difference to the tax threshold situation.
Ah, forgot to mention, I make additional voluntary contributions as the salary sacrifice part.
Same thing applies - no tax difference.
I use it for childcare vouchers and for pension
The childcare one was a real no-brainer as £250 of vouchers costs me £150.
I cant remember the numbers for the pension as other stuff changed at the same time but I am pretty sure the split of the employer NI was 50/50.
N
Thanks for the clarifications chaps 🙂