Salary Sacrifice??

Dick_here

Try asking your accountant. If you haven't got one, you need one.

jamesd

lightspeed, it's normal for employers using salary sacrifice to report a "scheme salary" which is the salary before sacrifice and for borrowers to report their underlying gross salary for borrowing purposes, not the one after sacrifice. If there's space on an application form also mention that pension contributions are by salary sacrifice to explain why there might sometimes be a difference betwwn gross pay and normal pay on a payslip. In the schemes I've been in the payslips were also clear about pre- and post-sactifice income so there would be no issue with lenders. Wasn't an issue with my mortgage lender.

Her take home pay appears to be £1370 - £71.57 based on those numbers. Her income tax and NI deductions will both be lower.

Salary sacrifice is the best way to pay pensions and she should be happy that her employer is doing it in the best way. It's a good thing that saves NI for employees, employers or both, effectively getting NI relief as well as income tax relief for pension contributions.

mickyduck

Hi I know that I get no tax relief using this method of payment into my pension but do I need to put anything on my tax return?

jamesd

You get the maximum possible amount of tax relief using this method of payment, without any need to put anything on your tax return.

The relief is given by taking the money out before it's even paid to you, so the tax is never deducted in the first place. You also save NI so it's even better than normal tax relief.

mickyduck

jamesd wrote: »

You get the maximum possible amount of tax relief using this method of payment, without any need to put anything on your tax return.The relief is given by taking the money out before it's even paid to you, so the tax is never deducted in the first place. You also save NI so it's even better than normal tax relief.

Thanks thought that but the box saying "do you contribute to a pension" confused me... if you tick it you have to enter amounts.
Now if the box said "do you contribute to a pension that you want to claim relief on" all would be crystal clear

jamesd

Your translation of the box caption is correct, it's for any pension contributions you make other than via salary sacrifice.

property.advert

Arthur_Harrison wrote: »

I have set myself up as a limited company, working for myself, I am quite keen to take up salary sacrifice, to pay more into a pension fund. there is only me in the company as I want to and continue to work for myself. Has anybody got experience of how to go about this as I am in a way my employer and employee? Any advice would be appreciated if someone has already done this!

As I understand it, you don't need to utilise salary sacrifice as your company can make the payment gross into your pension. The effect is the same but without the paperwork.

Presumably HMRC wants to see that this is a real scheme and not just your "under the bed pension pot" but I would think it bread and butter from an accountant's perspective.

RobStaffs

I pay tax in the 40% bracket so at present my tax code it set to ensure I get the additional 20% tax relief at source on my personal contributions.My company is now offering Salary Sacrafice and the question is would salary sacrafice impact on my level of tax relief? and do I have to inform HMRC?

Many thanks

jem16

RobStaffs wrote: »

My company is now offering Salary Sacrafice and the question is would salary sacrafice impact on my level of tax relief? and do I have to inform HMRC?

Many thanks

It wouldn't impact on the level of tax relief you receive but it will impact how you receive it. With salary sacrifice you will be taxed on a lower salary so immediate tax relief. You will need to inform HMRC and have the additional allowance in your tax code removed.

RobStaffs

jem16 wrote: »

It wouldn't impact on the level of tax relief you receive but it will impact how you receive it. With salary sacrifice you will be taxed on a lower salary so immediate tax relief. You will need to inform HMRC and have the additional allowance in your tax code removed.

Had a feeling this would be the case.Thanks for the reply.