Osbourne's tax relief changes in the March budget

gadgetmind

How about 13.8% employer's NI?

EdSwippet

gadgetmind wrote: »

How about 13.8% employer's NI?

Even allowing for that. Their policy is: either take this part of your compensation as an employer contribution into our group personal pension, or entirely forego it. No middle ground, no scope for redirection, no negotiation permitted.

gadgetmind

My employer has exactly the same policy. and I can't say that I object to it. Schemes that allow people to pick and choose are clearly more flexible (and they often allow pension/pay/holiday to be juggled) but they take a lot of admin.

EdSwippet

gadgetmind wrote: »

My employer has exactly the same policy. and I can't say that I object to it. Schemes that allow people to pick and choose are clearly more flexible (and they often allow pension/pay/holiday to be juggled) but they take a lot of admin.

I object to it at mine though. Due to the LTA reduction I cannot save into a pension past the end of this tax year, meaning I lose 10% of my compensation in future. Or I retire early.

zagfles

EdSwippet wrote: »

I object to it at mine though. Due to the LTA reduction I cannot save into a pension past the end of this tax year, meaning I lose 10% of my compensation in future. Or I retire early.

Why does that mean you can't save into a pension? Do you hit AA problems as well? If it's just the LTA, even if you get taxed at 55%, you still get 45% of the money your employer puts in. Even if eg you have to put 5% in to get the employer's 10%, you're still doubling the money you put in even with 55% tax.

EdSwippet

zagfles wrote: »

... If it's just the LTA, even if you get taxed at 55%, you still get 45% of the money your employer puts in.

But -- by not taking FP16 -- I also lose 25% of £250k in LTA tax charge, on the reduction from £1.25m to £1m. This £63k loss more than outweighs 45% of any annual employer contributions.

zagfles

EdSwippet wrote: »

But -- by not taking FP16 -- I also lose 25% of £250k in LTA tax charge, on the reduction from £1.25m to £1m. This £63k loss more than outweighs 45% of any annual employer contributions.

Ah OK makes sense, although I'd have thought IP16 would generally be better for someone who has the option of further employer conts they simply lose? But will obviously depend on years to retirement, assumed growth rates etc...

RickyB2000

EdSwippet wrote: »

And yet... my employer is more willing to lose an employee than they are to convert £10k of pension contribution into £10k of salary. I honestly have no idea why.

Maybe a budget thing your salary comes out of your bosses budget. £10k extra is £10k less for him to spend on other hires. The pension contribution comes from another budget, so doesn't effect him. Too much effort to try and move it all around.

gadgetmind

I'm currently doing some budget/headcount juggling and pensions, NI, etc. are reflected down to my bottom line.

As for lose pension contrib of leave, if I were banging my head against the LTA, then I'd leave, or reduce my days *drastically*.

This is why all of these pension tax relief cost reduction measures will turn into tax take reduction measured.

RickyB2000

Maybe you have other benefits linked to base salary like bonus and life assurance?

Legally, can they stop you opting back in even after your salary has gone up?