Salary Sacrifice Calculation - Help Please

MrsWenger

Thank you very much for taking the time to collate that information Dazed and Confused.

You are correct about the £200 adjustment on my 2019/20 tax notification.

Thank you for the tip about ringing HMRC once I have the salary sacrifice in place. Is is better to just pay them any owed amount or allow it to be incorporated into a revised tax code?

It has always been clear in my mind that it is my employer contributions to my pension but thank you for the reminder.

Dazed_and_confused

Paying the tax through a later years tax code is normal, there is no need to pay it but you can do if you want.

Personally I wouldn't, it is essentially a 12 month interest free loan (or 36 month interest free loan if it isn't all taken in 2019:20!).

And you mentioned something about a revised tax code for 2018:19 earlier in this thread so it might be that the tax owed incorporates an element of (estimated) tax owed for 2018:19 so you might be paying something which ultimately wouldn't actually be owed. That would seem an unnecessary complication. If you don't owe the full £200 (or whatever the real figure is) HMRC can simply send you an adjusted tax code to reduce that figure once they have reviewed 2018:19 this summer.

MrsWenger

Thank you again Dazed and Confused.

That makes perfect sense. I can see on the Government Gateway that there is a presumption about interest from some accounts that won’t be factual, a closed account for example.

Thank you again for all of your help and patience; I think your forum name is more applicable to me than you!

zagfles

MrsWenger wrote: »

Hi Zagfles, thank you for you reply.

I do understand that the 40% applies to income over the limit rather than all of my taxable my income.

I intend to increase my pension contributions significantly so I am keen to work out the point at which I would move to the lower band so I can decide what salary sacrifice to make as I have read a number of articles which suggest this is a beneficial thing to do.

I was hoping to have an accurate estimate to run the figures to determine the impact on my take home pay to make an informed decision about the salary sacrifice amount I commit to.

As you will have seen from my post, I made the calculations and thought £12,000 salary sacrifice would achieve this but Paul offered alternative calculations which suggested a much higher value.

In relation to the cliff edges you listed, my current savings interest is just shy of £1,000 per annum so I get the £500 allowance for that. Options 2,3 and 4 don’t apply to me.

On the government company car tax calculator it gives tax figures for both the 20% and 40% bands based on the benefit in kind value. I assumed it would also be beneficial to be in the 20% tax band in this regard but am I mistaken?

That was wrong because he worked it out assuming you have a personal allowance of your tax code. You don't. Your tax code is well below your personal allowance presumably because of your benefits (car, bupa etc), so that calculation was double counting them.

MrsWenger

Thank you for your reply Zagfles.

You are correct; those are the primary reasons for my tax code being what it is. Dazed and Confused picked up on the double counting too hence why I was asked to clarify the figures I had posted.

I am truly appreciative of the help I have received from everyone though and I can now crunch the salary sacrifice numbers with confidence and I am grateful to be in this place.