Salary Sacrifice

starsandbutterflys
starsandbutterflys Posts: 5 Forumite
in Pensions, annuities & retirement planning
Hi does anyone know if Salary Sacrifice shows on a P60..? i.e. is there anyway HMRC can find out how much someone has put into an occupation pension through earnings information sent over from the employer, without having to ask the employer to confirm the arrangement.

Thanks
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  • MichelleUK
    MichelleUK Posts: 427 Forumite
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    starsandbutterflys wrote: »
    Hi does anyone know if Salary Sacrifice shows on a P60..? i.e. is there anyway HMRC can find out how much someone has put into an occupation pension through earnings information sent over from the employer, without having to ask the employer to confirm the arrangement.

    Thanks

    No, they can not tell from a P60 as it only shows your earnings after sacrifice. They do get told by the pension provider how much has been paid into your pension but it will be a total figure including the employer contributions (as, from their viewpoint, it is all considered employer contributions).

    You may get it from your final payslip of the year, if the payslip shows cumulative contributions, and send them a copy.
  • LOST
    LOST Posts: 292 Forumite
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    Providers don't tell them how much you have paid personally. No way to capture that info on the reporting they do to HMRC
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  • MichelleUK
    MichelleUK Posts: 427 Forumite
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    LOST wrote: »
    Providers don't tell them how much you have paid personally. No way to capture that info on the reporting they do to HMRC
    Apologies, I know that the relief at source schemes do an annual return at detail level, but I did not realise salary sacrifice schemes did not. So I guess that HMRC do not actually check the annual contributions limits them - seems pretty slack!
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    MichelleUK wrote: »
    Apologies, I know that the relief at source schemes do an annual return at detail level, but I did not realise salary sacrifice schemes did not. So I guess that HMRC do not actually check the annual contributions limits them - seems pretty slack!
    The only things HMRC would presumably want to be able to check is:

    - the total gross pension via the relief at source method is not higher than the person's taxable gross earnings
    - the total gross pension via gross contribution and relief at source methods added together is not higher than £40k

    I thought they get both of those bits of data from the pensions firm. They don't need more granular data about whether individual elements of the contributions came from you agreeing a deduction from your net pay or deduction off your gross pay or sal sac off your gross pay or whatever.

    The second bullet point is obviously a simplified version assuming there is no spare element of the £40ks of previous years within the carryforward window, and the person is not getting taxable gross earnings plus gross pension contributions at a level which would taper the £40k to some lower number.
  • zagfles
    zagfles Posts: 20,318 Forumite
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    MichelleUK wrote: »
    Apologies, I know that the relief at source schemes do an annual return at detail level, but I did not realise salary sacrifice schemes did not. So I guess that HMRC do not actually check the annual contributions limits them - seems pretty slack!
    I believe the scheme has to inform HMRC if the AA has been exceeded in that scheme.
  • MichelleUK
    MichelleUK Posts: 427 Forumite
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    zagfles wrote: »
    I believe the scheme has to inform HMRC if the AA has been exceeded in that scheme.
    That makes sense... but what if you have two pensions that you contribute to during a year, do they not check the two combined do not exceed the limits available or do they rely on the pension contributor being honest (or at least knowledgeable on the rules and not exceeding their personal limits)?
  • MichelleUK
    MichelleUK Posts: 427 Forumite
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    bowlhead99 wrote: »
    The only things HMRC would presumably want to be able to check is:

    - the total gross pension via the relief at source method is not higher than the person's taxable gross earnings
    - the total gross pension via gross contribution and relief at source methods added together is not higher than £40k

    I thought they get both of those bits of data from the pensions firm.
    Exactly, it would be very disappointing if they did not check it.
  • zagfles
    zagfles Posts: 20,318 Forumite
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    MichelleUK wrote: »
    That makes sense... but what if you have two pensions that you contribute to during a year, do they not check the two combined do not exceed the limits available or do they rely on the pension contributor being honest (or at least knowledgeable on the rules and not exceeding their personal limits)?
    Not sure - presumably there's some way of them checking as otherwise fraud would be too easy. Having said that - HMRC seem incapable of checking pension contributon amounts when claiming tax credits, they usually want the claimant to send proof of pension conts rather than simply being able to check themselves.
  • AlwaysLearnin
    AlwaysLearnin Posts: 873 Forumite
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    I was thinking about a similar point the other day (overthinking perhaps...). If, for example, someone salary sacrificed a £40k wage down to minimum wage, would that mean they would exceed their annual allowance on the basis that their contributions would exceed their taxable gross income (/P60 amount?). I assume it can't work like this, can it?
  • zagfles
    zagfles Posts: 20,318 Forumite
    First Anniversary Name Dropper First Post Chutzpah Haggler
    AlwaysLearnin wrote: »
    I was thinking about a similar point the other day (overthinking perhaps...). If, for example, someone salary sacrificed a £40k wage down to minimum wage, would that mean they would exceed their annual allowance on the basis that their contributions would exceed their taxable gross income (/P60 amount?). I assume it can't work like this, can it?
    No. Their annual allowance is still £40k even if they sal sal down to minimum wage. There's a completely separate tax relief limit (100% of earnings/£3600) but that doesn't apply to employer contributions (all sal sac conts are employer conts). So there's no problem sal sac'ing down from £40k to NMW.

    This does cause confusion because of the sort of oversimplified rubbish you see everywhere, like "the limit is your earnings with a £40k max and £3600 min" which tries to combine two completely separate limits with completely different rules. Ignore any such drivel, as it leads to the sort of confusion above.

    1) You have an annual allowance of £40k. This includes employer contributions. Unused allowance can be carried forwards from the last 3 tax years.

    2) You have a tax relief limit of 100% of earnings or £3600 if greater. This doesn't include employer contributions. This can't be carried forwards.
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