Salary Sacrifice??

um5000

Thanks, I think this might be the case, but I don't think the company (or HMRC?) has suggested that it has to be an all or nothing thing (though of course that would provide maximum benefit, and it seems the pension provider thinks this way).

The company does already contribute 5% direct to the pension pot (although now I'm thinking I'd better double check they have done!), so not sure why the tax relief calculation should be a factor (though this is something that companies and pension providers conveniently omit when giving examples of the benefits of sacrifice schemes). The other 5% is paid by my wife (after tax) by direct debit, then grossed up by the pension provider.

Everyone else in the company is conveniently on a scheme that an(I)FA recommended by the company has suggested they use!

Not sure we'll have time to make a switch (even if she wants to) as they're only accepting applications up to 28 March. Perhaps will work something out for next year.

jamesd

Why doesn't she want to use the same one as everyone else for new money? She wouldn't have to transfer any existing money. I'm sure the company would prefer having everyone using the same scheme and the occasional transfer out route is the way to save costs for all if that does the job.

um5000

Thanks jamesd, we might explore that option. However we selected a stakeholder pension on the basis that it was flexible, portable, cost effective etc. Seems the lack of an option to take advantage of salary sacrifice is a drawback of such schemes.

ricarika

hello my employer just offer us Salary Sacrifice scheme in way.we give up 2800 of ours salary in return 2100 tax free meal allowance.they are saing e should end up 190 pound more a year.is that a fear deal or not.from what read they already benefit from not paing NI on 2800 plus i want to know where are lost 700 pounds 2800-2100=700.Or are they keeping them.thanks

Destin36

newmoneyuser wrote: »

Here are a few links to write up on the subject


claretmatt has already listed many of the advantages and possible issues, one other is that if you are in a position to drop your earnings below the 40% tax band, any general savings you may have will now only be taxed at 20% rather than 40%.

Also I've been trying to get an answer from the different government departments about any maximum amounts they consider a person can sacrifice as there were limits in the past, but currently there does not seem to be any, so you could sacrifice all earning above what is required to cover the mimimun wage requirements.

dude your second link is not working please can you give me some other alternative link that i will understand better.

Paul_Herring

Destin36 wrote: »

dude your second link is not working please can you give me some other alternative link that i will understand better.

Considering the post you replied to is 7½ years old, I'd be surprised if any of the links were still relevant now...

carolinec2828

Hi my husband works privately as a support worker and is now paying 40% tax. We are currently paying school fees for one child and will hopefully be paying for the second soon. Someone mentioned to me that it is possible to have a salary sacrifice into a 'pension ISA' which can then be used for school fees if we so wish, and will mean that he won't be stung for the higher rate of tax. Is this possible and how does one go about setting such a thing up? Most salary sacrifice schemes I have seen are organised by 'the company' but as he is employed privately there isn't anything like that in place.

Any help would be appreciated as my head is spinning!

jem16

carolinec2828 wrote: »

Someone mentioned to me that it is possible to have a salary sacrifice into a 'pension ISA' which can then be used for school fees if we so wish,

Never heard of this. Salary sacrifice would be used for a pension which can only be accessed at age 55 or above. You don't get any tax relief for paying into an ISA.

jamesd

Some employers have pension alternative schemes where they will pay into an ISA instead of a pension. It's something that is becoming more popular due to the annual limit on pension contributions. However, there is no direct tax benefit from it for the employee and the payment is subject to normal NI and income tax.

iaveight

Can I salary sacrifice so I dont pay the 40 percent on earnings over the high earner threshold?

Say I earned a gross salary of 70 000 GBP I am paying 40 Percent tax on any earnings over 32010 GBP

So can I salary sacrifice to say 30 000 GBP and only pay 20 percent tax

Regards