100% Salary Sacrifice

Paul_Herring

jamesd wrote: »

Don't forget VAT and duties on things you buy. At 40% your actual total tax and duty rate combined is likely to be over 60%.

http://blogs.spectator.co.uk/coffeehouse/2014/05/tax-freedom-day-is-a-reminder-of-the-choice-in-2015-high-tax-labour-low-tax-conservatives/

http://www.dailymail.co.uk/news/article-183099/Today-tax-freedom-day.html

40% if you believe the data producing Tax Freedom Day, though I'm not entirely convinced they've taken into account all taxes (excise? National Insurance?) And the fact that they're lumping net receivers with net contributors of tax to produce the 'average'.

jamesd

I don't believe the tax freedom day approach, or at least didn't use it in my post, because in that post I was interested in the taxes likely to be paid by a higher rate tax payer not the percentage of national income that is taxes, which is what tax freedom day uses:

"The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s national income (41.09% per cent in 2014), mapping that proportion onto the days of the year."

billchecker1

Just a quick update, this has all been authorised by our HR dept now and for the last month has gone through. It is now in an AVIVA pension fund where I have selected my own funds.

Can I just ask, to see if I have my maths right:

For every £1000 that I put in, that I get £1250 into my pension?

(1250 x 0.2 = 250). As I would have only got £1000 as cash, this seems like a great return in itself. Or do I have that wrong?

jem16

billchecker1 wrote: »

For every £1000 that I put in, that I get £1250 into my pension?

yes.

(1250 x 0.2 = 250). As I would have only got £1000 as cash, this seems like a great return in itself. Or do I have that wrong?

Out of that £1250, 25% would be tax free so £312.50. The rest of it is classed as taxable income so depending on your income at the time you take it, it may be subject to 20% or more tax.