Salary Sacrifice??

Paul_Herring

jamesd wrote: »

The effective legal maximum is enough to take you down to being paid at minimum wage level. That's because if you sacrificed to below minimum wage your employer would have to top your income up to minimum wage or be breaking the law.

Have you got a citation for that James? I seem to recall that, for example, getting a mortgage will (sometimes) take into account the pre-sacrifice wage; why is this different? Is minimum wage based on what ends up in the employee's bank or what they get gross before all deductions?

No great reason for an employer to have any other limit than minimum wage, in part because it also saves them money if you pay in as much as possible.

Debatable. Depends on how the scheme is run - if it's run on a 'nil difference'; any saving the company could have made on your reduced salary is [strike]actually[/strike] usually paid into your pension fund - employer NI is the usual example.

Of course some schemes will 'abuse' it by not giving the saving.

Pixieboy

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf

A salary sacrifice cannot reduce your cash pay below the National Minimum Wage.

The National Minimum Wage provides a legally binding minimum hourly rate of pay to workers aged 18 years or over - with few exceptions.

Paul_Herring

Pixieboy wrote: »

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf

A salary sacrifice cannot reduce your cash pay below the National Minimum Wage.

Ta for that, but can't read it on this PC - is it explicit that things like salary sacrifice cannot take the amount below the minimum wage, or is it an implicit assumption? e.g. 'Your take home pay may not be less than XXX'?

p00hsticks

Paul_Herring wrote: »

Ta for that, but can't read it on this PC - is it explicit that things like salary sacrifice cannot take the amount below the minimum wage, or is it an implicit assumption? e.g. 'Your take home pay may not be less than XXX'?

The document explicitly says "
A salary sacrifice cannot reduce your cash pay below the National Minimum Wage. "

jamesd

Paul_Herring wrote: »

Is minimum wage based on what ends up in the employee's bank or what they get gross before all deductions?

It's based on what the employee gets gross before all deductions.

But that doesn't mean what you probably intended to ask. The salary sacrifice eliminates salary and that eliminated salary is no longer part of the gross wage. It's not part of the "gross before all deductions" amount that appears on a payslip.

There is also a "scheme salary" that is commonly quoted for mortgage purposes and that's the salary before sacrifice. But this isn't effective for minimum wage calculations because it's not being paid.

chucknorris

Paul_Herring wrote: »

I think it's more likely to be limited to what you can contribute to your pension scheme which is set by the government and at the moment is the minimum of £50,000 or 100% of your salary.

So if you earn less than £50,000 you could, in theory, sacrifice the whole lot.

Certainly my employer placed no extra limits on what could be sacrificed for my scheme.

I have just signed up to sacrifice approx 67% of my salary for the next 3 years (I'm in the teachers pension scheme). I think it's a particular good deal and I wanted to grab the max benefit quickly just in case they start tinkering around with it and reducing it's value.

bilbo51

chucknorris wrote: »

I have just signed up to sacrifice approx 67% of my salary for the next 3 years (I'm in the teachers pension scheme). I think it's a particular good deal and I wanted to grab the max benefit quickly just in case they start tinkering around with it and reducing it's value.

Note that for people who are contracted into S2P, reducing earnings below the so-called Upper Accrual Point will reduce entitlement to S2P. UAP is currently £40,040 per annum.

chucknorris

bilbo51 wrote: »

Note that for people who are contracted into S2P, reducing earnings below the so-called Upper Accrual Point will reduce entitlement to S2P. UAP is currently £40,040 per annum.

Sorry but I have no idea what that means, could you please explain it? I don't know if this is relevant but I am fractional (part time) so my current gross salary is marginally below 40k, which is below the UAP anyway (hoping this spares me from whatever effect that this could have?).

I suspect that this is something to do with the state second pension which I don't think I am part of as I contracted out years ago.

Devon_Sailor

Ladies and gents,

I have dipped in and out of this thread from the beginning, and was initially impressed by the scheme. Then i started to stumble across all those posters talking about getting their salary down to a level whereby they would not only drop tax bands (a fair enough perk if you are putting into a pension and thus in the long term ensuring you are not quite so much of a burden on the public purse in later life), but qualify for various benfits.

Am I the only one who finds that morally wrong?! To have a salary of sufficient level to support your self and family, but loophole a chunk of it away so that you end up contnuing to ramp up the tax bill for others who have to pay for those benefits?

Quite simply - How dare you!

If you are on £40k+ the Government has, quite fairly in my mind, taken the view that the £1000-odd that you would get in child benefit could be put ot greater use helping support those in a slightly less fortunate position.

What the hell gives you the right to happily massage the figures so that you get your pensions cake, and then eat the benefits one too?!

In general, i dont have a problem with the idea of SS, but was just shocked and appalled by some of the brazen "lets get down to benefits claim level" attitude of some.

Apologies for the rant....but i find there is a big difference between making a system work for you and the morally bankrupt way some people seem to be playing this!

D_S

cfnc

Devon Sailor,

I think if if you were earning an amount that meant you lost your child benefit and by sacrificing an amount to enable you to keep it you would do it. It could be as little as £100 that means you lose the said £1000.

I have no problem with the child benefit being taken away for high earner but at least make it fair. At least taper the amount you lose on a sliding scale, so that it is fair for everyone.

Also which is unfair, a single parent or a couple with a stay at home parent in the higher tax band approx £42000 pa, loses all child benefit, but a couple both working earning up to a joint income of £80000 pa, still get child benefit.

So in answer to your rant Yes I would sacrifice salary to enable my family to keep receiving child benefit.