Salary sacrifice & NI

Albermarle

Currently I am a 40% taxpayer and with a salary sacrifice arrangement for pension contributions . So I only gain 2% NI from this ( no contribution from employer for their NI savings .
Next tax year I expect to retire around June and have no further taxable income for the rest of the tax year .So clearly will be due a tax refund ( I still pay some 40% tax even after salsac + the personal allowance will only be spread over a few months rather than 12) . My question is that with a lower annual income I should benefit from 12% NI saving but during the months that I will work next tax year, I will only be gaining 2% . Is there some way to recoup the difference?
Should I go into my personal tax account and lower my estimated earnings for next tax year ? That will maybe reduce the need for a tax refund but not sure if it has any effect on NI payments as my monthly salary for those few months will still be the same as now.
Any suggestions welcome !

zagfles

No. NI works on a pay period basis, not an annual basis.

Dazed_and_C0nfused

Should I go into my personal tax account and lower my estimated earnings for next tax year ? That will maybe reduce the need for a tax refund

I'm not sure that will have any impact on the need for a refund.

If you earn more than your monthly tax code allowances your employer is obliged to deduct tax so if your code is say 1200L then in month 1 of the tax year (to 5 May 2021) they would deduct tax if your taxable earnings exceeded £1,001.75.

Brynsam

zagfles said:

No. NI works on a pay period basis, not an annual basis.

Unless you're a director, in which case NI is based on annualised salary. 

MallyGirl

The only thing you might be able to do - if your systems allow it - is to sal sac down to NMW one month (and pay little or no NI) and then change the contributions amount to be lighter the following month. I can change my contributions as often as I like online but not everyone has that option. The tax will sort itself out as it is annual

Albermarle

zagfles said:

No. NI works on a pay period basis, not an annual basis.

I thought that might be the case but 'good' to have it confirmed .
he only thing you might be able to do - if your systems allow it - is to sal sac down to NMW one month
Only allowed to change once a year but thanks for the idea anyway .
Tax wise , I will just leave it as it is and claim a refund later .

michaels

MallyGirl said:

The only thing you might be able to do - if your systems allow it - is to sal sac down to NMW one month (and pay little or no NI) and then change the contributions amount to be lighter the following month. I can change my contributions as often as I like online but not everyone has that option. The tax will sort itself out as it is annual

Given you are only working a few months it might be worth Sal sac to NMW for the whole of the tax year if your pension is going to be taxed at 20%, only being 3 months you shouldn't run into annual allowance issues and you can get 25% as a tfls.  Might even be worth adding the remainder of your income into a sipp as you will get the tax back even though you never paid it in the first place (personal allowance) and again you can get the 25% TFLS so a 5% boost overall.

Dazed_and_C0nfused

6.25% boost for a basic rate payer at both ends 

Albermarle

A supplementary question .
2018/2019 was the last Self assessment I filled in . I was informed by HMRC it was not necessary anymore and I should use my personal tax account ( push for going digital I guess). I have used it successfully to change estimated income , tax code etc .
However if I look at 19/20 I can not see details of any tax calculation for the year . I can see income , how much tax was paid overall and each month but no actual calculation/reconciliation to show the right amount of tax was taken . Unlike with SA , where you got a clear calculation of exactly how the tax was calculated and how it compared to what you actually paid . 
Am I missing/misunderstanding  something with the personal tax account ?

Dazed_and_C0nfused

You should be seeing one of two messages, something like we have not calculated your tax yet or you paid the right amount (give or take a little).

Notwithstanding that it could change at any point till 5 April 2024!

Bemma

Dazed_and_C0nfused said:

6.25% boost for a basic rate payer at both ends 

Did you missed that this is Salary Sacrifice?  25% boost for a basic rate payer at both ends.  Could be more with employer NI added, but I notice the OP is not getting this.

Edit:  Sorry, I see the D&C is referring to the comment about contributing to a SIPP below the personal allowance.  Which is 6.25% boost.