Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • 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
    • 6,241 Posts
    • 7,595 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
    • 6,241 Posts
    • 7,595 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
    • 11,785 Posts
    • 9,733 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
    • 19,639 Posts
    • 14,644 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
    • 983 Posts
    • 1,131 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
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,488Posts Today

6,835Users online

Martin's Twitter