Diverting £50k of salary into pension fund to claim welfare benefits

chris_m

CSL0183 wrote: »

My salary is £65k,

On a salary of £65K you don't need benefits at all - they are there for those who really need them, not those who just want to be greedy.

gadgetmind

brasso wrote: »

We are all driven by self interest, but at what point does self interest become selfishness?

At the point where you want to get more back out than you put in IMO. Those trying to reduce their tax bill are still going to be net contributors to society, and I have no problem with that.

This particularly case (knocked into touch by lack of taxable income?) gave me an initial reaction of wanting to condem it, but that pension pot was going to be taxable on the way out, so it was borderline.

It was also jolly entertaining!

gadgetmind

chris_m wrote: »

On a salary of £65K you don't need benefits at all

When you use salary sacrifice, your salary reduces. Trust me, every man, his wife, and his dog, will be using this to keep on getting child benefit; I can picture the newspaper headlines for April 2013 already!

atush

Bigsmak wrote: »

Bloodsucking University Children....... lol

:beer:

Leeches, the lot of them lol. Oh well, maybe they will keep me in my old age when my drawdown runs out?

rictus123

How much is child benifit that people would do this? But i suppose for same outcome + massive pension v no pension its a no brainer.

gadgetmind

rictus123 wrote: »

How much is child benifit that people would do this? But i suppose for same outcome + massive pension v no pension its a no brainer.

"You get £20.30 a week for your eldest child and £13.40 a week for each of your other children."

As for "massive pension", bear in mind that £100k in a private pension pot gets you a heady £5000 pa at age 55. You need to be saving a lot for a long time to match a final salary pension.

CSL0183

Bigsmak wrote: »

Spot on.. You cannot pay more in than you declare as Salary..

If you are serious about this I would probably look at dipping your toe just over the 40% taxation mark as you will be given the initial %25 uplift to your pension but be able to claim 20% back on the rest of of your Pension contribution when you fill in your tax return at the end of the year.


Limits on tax relief
You can save as much as you like into any number and type of registered pension schemes and get tax relief on contributions of up to 100 per cent of your earnings (salary and other earned income) each year, provided you paid the contribution before age 75.

Read the rest of the stuff on that page..

EDIT -

re-reading, I actually can't see a reason why you can't pay in more than 50k.. it looks like it is the barrier to the tax relief.. If this is so, then you would be better off maxing your ISA out for that year and investing elsewhere with the rest.. so 50k would still be a limit for you. Taxation speaking. But you still can't pay in more than you declare in 'all earnings'

Sorry, I still cant see anything there where it states I cannot divert £50k of my £65k salary into my pension, it states its possible to pay in upto 100%, not 50%

The £50k is just the tax relief limits, I suspect I would still need to be paid a minimum wage from my company. The inland revenue would just see a minimum paid job of £12k due to the way SS works.

BLB53

Whether or not it is possible misses the point, imo it is morally corrupt and it is no wonder the country is in such a mess because it has created a society where people think it is ok to even consider this to be an option.

atush

In most other countries, incl the USA, you get an allowance agaonst tax for each dependant child. The uk decided to go with chold benefit instead, as it put the money into mothers hands/pockets instead fo hoping their husband would give them some of the pay packet on a Friday. A good and noble sentiment, but in this day and age not so sure this is the right way to go.

So, as i said, I have no objection to slary sacrifce to reudce tax and retain CB. But lowering salary to min wage and collecting tax credits, HB is a whole other thing.

We could debate this all day, but if it is legal, it is legal. But I wouldn't do it. But if the OP wants to, that is up to them. My only worry if I was in that position is would it throw up a tax audit from HMRC, which is expensive and time consuming.

JenJen70

Are you saying that on a salaryof £65,000 you rent a property and don't own one?

If so LHA would only disregard a % of your pension contributions, I think it's 50% but it's a long time since I was an assessor so not totally sure on that.