Salary Sacrifice - Too good to be true?

6022tivo

webnibbler wrote: »

Salary sacrifice is a very good deal, especially if the employer passes on their NI savings. I recently bumped mine up to 40% and would really like to fit 50% in the next few years.



If the employer passes on 100% of their NI saving then it will be 13.8% of the contribution for a basic rate tax payer. So £100 contribution attracts an addition of £13.80.

Yes, they do, and that's how I understand it. Sorry if I wasn't clear in the initial post.
Quite unusual apparently for a company to pass on all the savings.

Mogley

jimjames wrote: »

The main upsides are that you can move benefit more than just the drop in NI and tax if it means your salary now takes you out of the net of various restrictions. So if you have kids and earn £55k, pension of £5k will mean you can receive full child benefit.

Exactly what I plan to do next tax year. Take advantage of increasing my salary sacrificed pension contribution to maintain child benefit contributions for my three children. Win Win .

6022tivo

Mogley wrote: »

Exactly what I plan to do next tax year. Take advantage of increasing my salary sacrificed pension contribution to maintain child benefit contributions for my three children. Win Win .

This is a massive loop hole isn't it.

So pension contributions doe not have to be entered on a claim for Tax Credits?

Doshwaster

I'm just enjoying this while I can as every year I expect the Chancellor to tighten up salary sacrifice schemes in the Budget but we escaped again yesterday.

I also like the fact that you don't have to remember to claim back the extra tax as a higher rate payer.

bigadaj

aajax42 wrote: »

Was advised to salary sacrifice some time ago, but the rules of our pensions were not explained. Had built up £96,000. Now discover that what you can take out in cash is equivalent to 25% of your total pension pot. For us that means we can take just over 50k in cash but have to use the remaining 46k to buy additional annuity. If we had known about the rule we would have stopped the salary sacrifice when it reached 50k . Fells like we have lost 46k through poor advice.:(

Who supplied the advice?

6022tivo

For info.

I've just ramped up my Salary Sacrifice for the forthcoming year to a point in which my salary is just under 11,500 to get the maximum tax benefit.

To me, this is a non brainer!

PeacefulWaters

6022tivo wrote: »

For info.

I've just ramped up my Salary Sacrifice for the forthcoming year to a point in which my salary is just under 11,500 to get the maximum tax benefit.

To me, this is a non brainer!

£11,850 is the tax allowance.

6022tivo

Yeah, sorry.. I also get two lots of health benefits that are worth about £400 a year..

My company also add their NI savings to my pension pot and don't take them for themselves which I believe they are entitles to, so another bonus!

Lungboy

Aren't you in danger of ending up under the minimum wage?

6022tivo

Good point, I only work 28 hours a week, and it calculates at around £7.80 an hour which I think is ok??