FT - Tories to raid tax relief pensions

MK62

As I said.....looks like a grey area.....but even so, it may also depend how rigourously HMRC implements such rules - I suspect there may be internal policies at HMRC which the general public are not made aware of. 

The bullet points are not mine - I clearly stated that they are from a Royal London paper, and provided a link to it - they are Royal London's take on it, given with the proviso that it is their understanding of the rules (as of April 2019 anyway) - perhaps they are wrong!
As to whether your last job's salary sacrifice pension arrangement was viewed by HMRC as a "successful" one, obviously I don't know - perhaps your scheme had a dispensation from HMRC at the time (though I'm speculating there). Perhaps the variation was allowed due to natural variation in your income (such as variable overtime etc)?

zagfles

MK62 said:

As I said.....looks like a grey area.....but even so, it may also depend how rigourously HMRC implements such rules - I suspect there may be internal policies at HMRC which the general public are not made aware of. 

The bullet points are not mine - I clearly stated that they are from a Royal London paper, and provided a link to it - they are Royal London's take on it, given with the proviso that it is their understanding of the rules (as of April 2019 anyway) - perhaps they are wrong!
As to whether your last job's salary sacrifice pension arrangement was viewed by HMRC as a "successful" one, obviously I don't know - perhaps your scheme had a dispensation from HMRC at the time (though I'm speculating there). Perhaps the variation was allowed due to natural variation in your income (such as variable overtime etc)?

That paper was a guide to salary sacrifice (they call it salary exchange) aimed at employers, in fact encouraging employers to use it! Why would a reputable company like RL produce a guide aimed at employers and financial advisers if it was for something that could be a legally dodgy? They do say how employers can take steps to ensure that the sal sac is "successful".

zagfles

ffacoffipawb said:

MK62 said:

It would appear to be something of a grey area then........this is Royal London's take on it - 

HMRC also state in their guidance that for an exchange to be successful:
• an employee cannot retain the right to revert back to the higher salary
• it must not be retrospective
• it must constitute an enforceable variation of the employee’s right to remuneration

from https://adviser.royallondon.com/globalassets/docs/shared/guides/ss7-a-guide-to-salary-exchange.pdf - dated April 2019.
How rigourous HMRC enforcement is might also be a factor (at present anyway, but that could change) 

Still, we digress......we should stay on topic really, even though such diversions can throw up some interesting snippets....

Regarding the first bullet point, we were allowed to increase or decrease our salary sacrifice pension contributions at my last job.

Does the possibility of decreasing the contribution (reverting to a higher salary, effectively) mean it wasn't a true salary sacrifice then?

No, it'll be legal technicalities. For instance, something like, you don't have the right to simply revert to back to the higher salary, but you could agree a contractual change where your pension conts are lower and your pay is higher. So effectively every change you make is a contractual change.

I don't really understand the legal technicalities, but the fact that large companies have been running sal sac schemes for years where employees can change contributions up or down, and HMRC will be quite aware of this and have not done anything about them, would not cause me as an employee to worry about doing anything dodgy by taking part in a sal sac scheme.

Mick70

I don't think they will hit the tax relief, it would impact too many voters and would put people off saving as much towards pensions - also would need to do something to DB schemes also if that were case .
They may stop salary sacrifice schemes though or reduce the % tax free lump sums possibly.
Anyway, were all speculating and in truth Nobody on here knows for sure

MK62

zagfles said:

MK62 said:

As I said.....looks like a grey area.....but even so, it may also depend how rigourously HMRC implements such rules - I suspect there may be internal policies at HMRC which the general public are not made aware of. 

The bullet points are not mine - I clearly stated that they are from a Royal London paper, and provided a link to it - they are Royal London's take on it, given with the proviso that it is their understanding of the rules (as of April 2019 anyway) - perhaps they are wrong!
As to whether your last job's salary sacrifice pension arrangement was viewed by HMRC as a "successful" one, obviously I don't know - perhaps your scheme had a dispensation from HMRC at the time (though I'm speculating there). Perhaps the variation was allowed due to natural variation in your income (such as variable overtime etc)?

That paper was a guide to salary sacrifice (they call it salary exchange) aimed at employers, in fact encouraging employers to use it! Why would a reputable company like RL produce a guide aimed at employers and financial advisers if it was for something that could be a legally dodgy? They do say how employers can take steps to ensure that the sal sac is "successful".

Nobody has said salary sacrifice itself is "legally dodgy"......rather just questioning whether certain practices might not be in full compliance with HMRC's own rules on salary sacrifice (if they actually enforce them of course).......You could equally wonder why a reputable company like RL would produce a guide to salary exchange/sacrifice, aimed at employers and financial advisers, containing information which is untrue/misleading/unclear......but like I said a few posts ago, perhaps they are wrong on that point!

PS....we may be talking at cross purposes here.......varying your salary sacrifice pension contributions up and down is, of course, OK (eg variable overtime, AVCs etc).......but AIUI (and what I was getting at), not beyond the lower limit agreed in the salary sacrifice arrangement.....ie, if your salary is £62000, but then becomes £50000 plus a £12000 employer contribution under a salary sacrifice arrangement, you can vary that pension contribution up and down, but not below the agreed £12000 in return for some/all of the sacrificed salary.......that is my interpretation of what RL are saying in the bullet point anyway......

zagfles

MK62 said:

zagfles said:

MK62 said:

As I said.....looks like a grey area.....but even so, it may also depend how rigourously HMRC implements such rules - I suspect there may be internal policies at HMRC which the general public are not made aware of. 

The bullet points are not mine - I clearly stated that they are from a Royal London paper, and provided a link to it - they are Royal London's take on it, given with the proviso that it is their understanding of the rules (as of April 2019 anyway) - perhaps they are wrong!
As to whether your last job's salary sacrifice pension arrangement was viewed by HMRC as a "successful" one, obviously I don't know - perhaps your scheme had a dispensation from HMRC at the time (though I'm speculating there). Perhaps the variation was allowed due to natural variation in your income (such as variable overtime etc)?

That paper was a guide to salary sacrifice (they call it salary exchange) aimed at employers, in fact encouraging employers to use it! Why would a reputable company like RL produce a guide aimed at employers and financial advisers if it was for something that could be a legally dodgy? They do say how employers can take steps to ensure that the sal sac is "successful".

Nobody has said salary sacrifice itself is "legally dodgy"......rather just questioning whether certain practices might not be in full compliance with HMRC's own rules on salary sacrifice (if they actually enforce them of course).......You could equally wonder why a reputable company like RL would produce a guide to salary exchange/sacrifice, aimed at employers and financial advisers, containing information which is untrue/misleading/unclear......but like I said a few posts ago, perhaps they are wrong on that point!

PS....we may be talking at cross purposes here.......varying your salary sacrifice pension contributions up and down is, of course, OK (eg variable overtime, AVCs etc).......but AIUI (and what I was getting at), not beyond the lower limit agreed in the salary sacrifice arrangement.....ie, if your salary is £62000, but then becomes £50000 plus a £12000 employer contribution under a salary sacrifice arrangement, you can vary that pension contribution up and down, but not below the agreed £12000 in return for some/all of the sacrificed salary.......that is my interpretation of what RL are saying in the bullet point anyway......

In most sal sac schemes you can increase and decrease your pension conts as much as you want, usually every month, in some just once a year (those who haven't kept up to date with the latest legislation changes, or who want to treat pension conts along with other stuff that's only changeable annually).

As above I think it's simply down to not having an automatic right to say "give me pay instead of pension", rather a necessity to agree a contractual change that in future my pay is x and my employer pension conts are y.

Otherwise nobody could make temporarily big sal sacs from basic pay and then revert, and plently do, including me.

But it's not really something for employees to worry about it - check the rules of your sal sac scheme set up by your employer.

Mick70

we dont have a salary sacrifice scheme at work but I may ask the FD if he would consider it as Im assuming you can get more into your pension at a lower cost  

Mistermeaner

Almost there guys 

JoeCrystal

I am looking forward to seeing if there are any things useful for the retirement provision as well any improvement in the taxes, especially for a single childless healthy person. 

Mick70

I think the budget will have changed quite a bit from original plans , be surprised if much impact on pensions