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  • FIRST POST
    • dprice
    • By dprice 19th Apr 17, 3:23 PM
    • 49Posts
    • 11Thanks
    dprice
    Salary Sacrifice
    • #1
    • 19th Apr 17, 3:23 PM
    Salary Sacrifice 19th Apr 17 at 3:23 PM
    Looking for confirmation figures are correct.


    Company is offering Salary Sacrifice. I'm looking to make 13% contributions on 43.5k take home.


    13% pension contributions p/m: £471.25
    Take home : £2,361.31
    Total Pension Contribution : Plus 20% tax = £565.20


    To match take home pay you contribute the below. SS gets added with employer contributions so now tax to be added. :


    Salary Sacrifice Calculations p/m: £555
    Take home: £2,361


    So you loose £10 per month on contributions, and where is the NI saving?


    Been going through several calculators, I was expecting to add the NI savings on to make the overall contribution greater?


    Employer isn't passing on any of their NI savings.
Page 1
    • PeacefulWaters
    • By PeacefulWaters 19th Apr 17, 3:27 PM
    • 6,579 Posts
    • 8,072 Thanks
    PeacefulWaters
    • #2
    • 19th Apr 17, 3:27 PM
    • #2
    • 19th Apr 17, 3:27 PM
    where is the NI saving?
    In your net pay.
    • dprice
    • By dprice 19th Apr 17, 3:34 PM
    • 49 Posts
    • 11 Thanks
    dprice
    • #3
    • 19th Apr 17, 3:34 PM
    • #3
    • 19th Apr 17, 3:34 PM
    In your net pay.
    Originally posted by PeacefulWaters
    Net (take home) pay is the same though?
    • PeacefulWaters
    • By PeacefulWaters 19th Apr 17, 3:38 PM
    • 6,579 Posts
    • 8,072 Thanks
    PeacefulWaters
    • #4
    • 19th Apr 17, 3:38 PM
    • #4
    • 19th Apr 17, 3:38 PM
    Net (take home) pay is the same though?
    Originally posted by dprice
    Sorry. Misunderstood. I'll read properly next time!
    • zagfles
    • By zagfles 19th Apr 17, 3:39 PM
    • 11,985 Posts
    • 9,940 Thanks
    zagfles
    • #5
    • 19th Apr 17, 3:39 PM
    • #5
    • 19th Apr 17, 3:39 PM
    You're confused. What is your GROSS pay? This is what NI is based on. When you sal sac you reduce your gross pay and instead the company makes a pension contribution, so by reducing your gross pay you reduce your NI.
    • Lokolo
    • By Lokolo 19th Apr 17, 4:04 PM
    • 19,670 Posts
    • 14,675 Thanks
    Lokolo
    • #6
    • 19th Apr 17, 4:04 PM
    • #6
    • 19th Apr 17, 4:04 PM
    No Pension:

    Gross: £43,500 / £3,650
    Net: £32,861.48 / £2,738.46

    Without Salary Sacrifice:

    Pension: £5,655 / £471.25
    Gross: £43,500 / £3,650
    Net: £27,206.48 / £2,267.21

    With Salary Sacrifice:

    Pension: £5,655 / £471.25
    Gross: £37,845 / £3153.75
    Net: £29,016.08 / £2,418.01

    A summary of figures. Use https://listentotaxman.com to calculate figures. Based on normal tax code without any other deductions.

    Someone might be able to come along and confirm my figures.
    Last edited by Lokolo; 19-04-2017 at 4:07 PM.
    • Triumph13
    • By Triumph13 19th Apr 17, 4:07 PM
    • 1,005 Posts
    • 1,186 Thanks
    Triumph13
    • #7
    • 19th Apr 17, 4:07 PM
    • #7
    • 19th Apr 17, 4:07 PM
    Definitely confused. If your gross pay is £43,500 then you will be contributing £471.25 a month from your PRE TAX pay. There is no grossing up of the contribution.


    On that £471.25 if you had taken it as salary instead of pension you would have paid 32% in combined NI and Tax. As a pension contribution without sal sac you would have avoided the 20% tax, but still paid 12% NI on it. With Sal Sac you save both so your takehome pay is higher under sal sac by 12% of £471.25
    • dprice
    • By dprice 19th Apr 17, 4:23 PM
    • 49 Posts
    • 11 Thanks
    dprice
    • #8
    • 19th Apr 17, 4:23 PM
    • #8
    • 19th Apr 17, 4:23 PM
    Thank you, I was placing the incorrect figure into the calculator.


    With Salary Sacrifice + Tax saving:

    Pension: £8,304 / £692
    Gross: £35,196 / £2933.00
    Net: £27,214.76 / £2,267.90


    Taking SS I am better off by £1,518 / £126.50
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