Salary Sacrifice

dprice

Looking for confirmation figures are correct.


Company is offering Salary Sacrifice. I'm looking to make 13% contributions on 43.5k take home.


13% pension contributions p/m: £471.25
Take home : £2,361.31
Total Pension Contribution : Plus 20% tax = £565.20


To match take home pay you contribute the below. SS gets added with employer contributions so now tax to be added. :


Salary Sacrifice Calculations p/m: £555
Take home: £2,361


So you loose £10 per month on contributions, and where is the NI saving?


Been going through several calculators, I was expecting to add the NI savings on to make the overall contribution greater?


Employer isn't passing on any of their NI savings.

PeacefulWaters

where is the NI saving?

In your net pay.

dprice

PeacefulWaters wrote: »

In your net pay.

Net (take home) pay is the same though?

PeacefulWaters

dprice wrote: »

Net (take home) pay is the same though?

Sorry. Misunderstood. I'll read properly next time!

zagfles

You're confused. What is your GROSS pay? This is what NI is based on. When you sal sac you reduce your gross pay and instead the company makes a pension contribution, so by reducing your gross pay you reduce your NI.

Lokolo

No Pension:

Gross: £43,500 / £3,650
Net: £32,861.48 / £2,738.46

Without Salary Sacrifice:

Pension: £5,655 / £471.25
Gross: £43,500 / £3,650
Net: £27,206.48 / £2,267.21

With Salary Sacrifice:

Pension: £5,655 / £471.25
Gross: £37,845 / £3153.75
Net: £29,016.08 / £2,418.01

A summary of figures. Use https://listentotaxman.com to calculate figures. Based on normal tax code without any other deductions.

Someone might be able to come along and confirm my figures.

Triumph13

Definitely confused. If your gross pay is £43,500 then you will be contributing £471.25 a month from your PRE TAX pay. There is no grossing up of the contribution.


On that £471.25 if you had taken it as salary instead of pension you would have paid 32% in combined NI and Tax. As a pension contribution without sal sac you would have avoided the 20% tax, but still paid 12% NI on it. With Sal Sac you save both so your takehome pay is higher under sal sac by 12% of £471.25

dprice

Thank you, I was placing the incorrect figure into the calculator.


With Salary Sacrifice + Tax saving:

Pension: £8,304 / £692
Gross: £35,196 / £2933.00
Net: £27,214.76 / £2,267.90


Taking SS I am better off by £1,518 / £126.50