Salary Sacrifice for those who have kids?

JustAnotherSaver

I don't really know the ins and outs of salary sacrifice. I looked in to it a while ago and if i understood correct then...
* it lowers the money i earn gross
* which means i pay less tax and national insurance
* which also means my employer pays less on the national insurance
* so what they save they can pass on a portion to me as a boost to my pension
* and the knock on effect is that my net pay gets a boost also

So win-win-win?

I did ask about it but was shut down with them giving a reason of having to still pay people who are on the sick.

Since that we've had a manager come in who seems to be able to work things for the workers that had previously been impossible so i was thinking of seeing if they could maybe get this put through.


Most people i work with aren't interested in pensions. They're interested in the money that's in the bank on pay day. So if this can increase net pay then that will grab their interest whereas i'm interested in the pension boost as well as obviously the net pay boost.

Thing is many of them have young kids & claim some sort of benefits. I never really paid attention to this side as i have no children.

I did read that it 'could' effect benefits. Well they wont be interested in 'could', it either will or wont.

So i was just dropping by here to see if anyone here could say whether i'd got it right so far and if so then could you also explain the effect on child benefits? As that may effect whether this manager bothers to try and push it through as an option.


Oh and from the employers point of view ... could they put in some sort of clause whereby if you're on sick leave or long term sick leave then salary sacrifice would stop? Since that's their concern.

choccielover

You can't not pay it as it's a sacrifice from salary

It reduces your gross pay so can increase your likelihood of staying in the CB rage but can mean you nay have to look carefully if you are applying for a mortgage etc. You can't sacrifice below min wage so some people may not be eligible

I think

michaels

Sal sac below 50k and you keep child benefit.

Sal sac down to minimum wage and if your partner doesn't work you get lots of child tax credits.

Make additional voluntary contributions on your min wage pay and you get tax releif on tax you probably never paid because of the personal allowance and receive maximum working and child tax credits. You can also potentially get reduced water charges, winter fuel allowance, half price school music lessons. Reduce your hours below 24 as a couple and you lose working tax credits but gain free school meals and free music lessons. Your kids then also earn their schools an extra approx £1k per annum, not just for the period when they get free school meals but for the next 6 years as well. If you have no savings you might also get council tax benefit and housing benefit.

Don't forget max pension per annum is your earned income or 40k (although there is up to 3 years carry forward of previously unused allowance).

xylophone

https://worksmart.org.uk/pension-advice/tax/childcare-vouchers/i-am-currently-receiving-tax-credits-government-how-will-these

JustAnotherSaver

I can see this being a situation where 'too much thinking' is involved & people wont be bothered to spend the time & will just say sod it.

Thanks though.

And if they 'can't not pay it', as in if the employee is on sick leave then the company can't suddenly 'revert them back to normal pay' or whatever so that they don't have to pay salary sacrifice then i can't see my employers going for it.

We frequently seem to have at least one person on long term sick. There's one off right now & he's a joke, blatantly taking the piddle, openly admits to working the benefit system & being workshy. It's because of people like that that will stop it for the rest of us.

JustAnotherSaver

Just a question i should've asked earlier...

I only really understand the basics of salary sacrifice right now. I'm not really fluent in the ins & outs of it all.

So i have to ask, if the employer did offer it & your salary is reduced to what it is now, is there a way in which they could basically pocket some of your money without you knowing? You will be left thinking you've got a decent deal & they'll be the ones laughing, unless you know how to work it all out?



Also the term 'salary' sacrifice. I've always known people on salary to be people who get paid a set amount every month. My wife is on this for example. Her pay doesn't go up or down, it's the same every single month.
I on the other hand vary wildly. One week i may do 50 hours, the next i could do 60 so on & so forth. My pay will change from week to week, month to month.

So is this thing suitable for people like myself or is it only for people like my wife who are on a set amount every pay day?

bigadaj

It should work for anyone who is an employee.

There are plenty of free salary calculators available on the net to check what is actually being paid, little more complicated if your pay varies monthly but shouldn't take more than a few minutes if you are concerned, they are just as likely to be fiddling Hmrc if they Fidel you and at isn't wise at all.

Firms aren't obligated to give you any of the employers savings, my current firm gives me nine of theirs and the maximum I've had with previous employers is a 50:50 split.

Alexland

My employer pockets their NI saving however it does cost them more to administer, they are fairly generous with the matched contribution and you are still saving the employee NI. If you are offered salary sacrifice it is almost always worth taking providing you continue to pay enough NI to get your state pension.

By paying more into my pension I keep my income below £50k (or less as I also like to avoid 40% tax) which means we get child benefits.

Kynthia

I think employers who keep the NI savings often use them to fund the administration of the scheme and offset the costs of still paying the benefit when people are off work. So I think smaller employers fear not making enough savings to cover everything.

bigadaj

Kynthia wrote: »

I think employers who keep the NI savings often use them to fund the administration of the scheme and offset the costs of still paying the benefit when people are off work. So I think smaller employers fear not making enough savings to cover everything.

That's a very trusting view, the administration of the scheme costs them very little over and above running the pension side of payroll.

Why are people obsessed with the whole sickness and off work side of things, that's irrelevant for salary sacrifice and just a function of your e,ploysnet contract surely.

Kynthia

bigadaj wrote: »

That's a very trusting view, the administration of the scheme costs them very little over and above running the pension side of payroll.

Why are people obsessed with the whole sickness and off work side of things, that's irrelevant for salary sacrifice and just a function of your e,ploysnet contract surely.

I think it's a big deal to employers as I know many resented paying childcare vouchers during maternity leave. They had to bear the cost once an employee went down to just smp. Now many don't due to a court case an employee lost when an employer refused.