Affordability and Salary Sacrifice

charlesb80

Hi,

For the new affordability tests, should payments on salary sacrifice be taken at their full value (e.g. £500 per month) or their effective value (e.g. the amount that it reduces your pay as you are not paying tax or NI on the sacrificed amount)?

As an example, if you had £500 per month in salary sacrifice, but this only reduced your take home pay by £350, would the correct value for the calculator be £350 or £500?

Thanks to anyone kind enough to reply!

[Deleted User]

Depends if they use gross salary, or net pay in their calculations I think.

charlesb80

In the case of net salary it doesn't matter as it is already taken into account. In the case of gross it matters as if you take the numbers at face value you underestimate the salary (by adding NI and tax that is not taken).

An advisor told me that the FCA rules state that they must take them at face value - I just want to know whether this is accurate as it does not make sense to me.