Further contributions after salary sacrifice

Kalashnikov

My company will only allow me to sacrifice 15 percent of my gross. They put in 6%. 

Of course I want to maximise my contributions to pull me back into the lower threshold of income tax Less 50k. 

I am told I will need to make remainder payments as relief at source and I assume that will be 20% relief the other 20% I would need to go to hmrc (what is this process? how would I go about doing this? timing ?)
am I better off dumping the excess cash to drop me below 50k into a new SIPP like vanguard or pay into my workplace pension plan at 0.781% total charge. 

Is it worth doing now or wait till March 2021?

Thoughts ? 

Brynsam

Wrong heading - this isn't about salary sacrifice at all!

For personal contributions made direct to a RAS scheme, you can apply direct to HMRC at any time or claim the extra relief via your self assessment tax return. https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

What are the costs of the SIPP (for the fund choices you have in mind) - higher or lower than your workplace pension? You can then make your own decision. Sooner you do it the sooner the pot starts increasing (hopefully).

Kalashnikov

Brynsam said:

Wrong heading - this isn't about salary sacrifice at all!

For personal contributions made direct to a RAS scheme, you can apply direct to HMRC at any time or claim the extra relief via your self assessment tax return. https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

What are the costs of the SIPP (for the fund choices you have in mind) - higher or lower than your workplace pension? You can then make your own decision. Sooner you do it the sooner the pot starts increasing (hopefully).

Workplace pension is with standard life = 0.781%
Thinking about opening a sipp with vanguard I hear the headline is 0.15%
The reason i went with the heading is because i want to save on much tax as possible especially in the 40% bracket. For example my gross salary is 77k 
I can successfully sacrifice 12.5k 
Leaving approx 65k taxable. 
Of that I would invest 15k in a new sipp. Is my rough calculation correct ?
Of course of the above 15k I only need to drop 12k and get 3k RAS  relief at source.???
 

kinger101

Is there a reason your company only lets you sacrifice up to 15%?  Seems strange that they'd voluntarily pay extra employer's national insurance. I'd push them on this, copying in someone senior in finance.

If you do need to use the SIPP, you simply pay in 80% of the amount you need to get yourself back into BR tax.  The SIPP will automatically top up to 100%, but you'll have to claim the rest back from HMRC. Which is easily done by writing to them with details of the SIPP contribution.

Kalashnikov

kinger101 said:

Is there a reason your company only lets you sacrifice up to 15%?  Seems strange that they'd voluntarily pay extra employer's national insurance. I'd push them on this, copying in someone senior in finance.

If you do need to use the SIPP, you simply pay in 80% of the amount you need to get yourself back into BR tax.  The SIPP will automatically top up to 100%, but you'll have to claim the rest back from HMRC. Which is easily done by writing to them with details of the SIPP contribution.

My company HQ is based on the continent, don’t think they have a full grasp of uk pension laws 

“When concluding the pension plan, the company has decided to put a cap on the level of contributions paid via salary exchange. 

The reason is due to the rules around maternity and paternity pay, where the employer has to take responsibility for paying all of the pension contributions (both employer and employee).”

Stupid Really 

Paul_Herring

Is there a reason your company only lets you sacrifice up to 15%?

This is, I suspect, a continuation of this reddit thread. No (satisfactory) answer was forthcoming there either.

https://www.reddit.com/r/UKPersonalFinance/comments/gx3gwf/salary_sacrifice_blocker/

Albermarle

Workplace pension is with standard life = 0.781%
Thinking about opening a sipp with vanguard I hear the headline is 0.15%

The Vanguard SIPP has a platform charge of 0.15% + the cost of the ( Vanguard only ) funds that are available on the platform .

Other SIPP platforms have more choice of funds and other types of investments ( shares for example ) but have platform charges of 0.25% to 0.45% . If you have a larger sum of money invested there are platforms with an annual one off charge that can work out cheaper. Here is a link to a comparison table.

https://monevator.com/compare-uk-cheapest-online-brokers/

Your workplace SL pension has only one charge that covers everything. Sometimes there are discounts on workplace pensions that are not immediately obvious so you ned to double check this.