Salary Sacrifice timings

kinger101

Hi all

Just checking on this one.  My employer offers a salary sacrifice pension scheme.  Typically, salary sacrificed gets paid into the pension scheme around the middle of the next month.  So am I correct in thinking that the salary sacrificed this month will count towards the 2022/2023 pension annual allowance rather than the 2021/2022.

Thanks.

DoctorStrange

Good question.

I'd always assumed it was the date deducted from your pay but if it's the date credited to the pension that might be tricky...

Hopefully Dazed will confirm shortly!

Jeremy535897

See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm053200

Dazed_and_C0nfused

I found a similar things, in relation to net pay contributions, but cannot find anything specific to salary sacrifice.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000#IDA0QUFG

zagfles

I think it's the date it actually goes into the pension, but not sure on this. I've not found anything definitive. However unless you're maxing out the annual allowance with carry forwards, it probably doesn't matter. 

Do your pension statements show the PIA, if so you could probably tell from that.  

kinger101

The pension contributions on my payslip and the amounts received according to Scottish Widows differ, due to the March v April timing difference.  The issue is as you describe - I'll be maxing out AA and the c/f over the next couple of years.  It doesn't matter so much for this year, but it will for next.  I'm trying to string out keeping income below £100K for as long as possible to avoid the double whammy of 60% tax and losing tax-free childcare/nursery hours.

So I'd like to know if sacrificing a March 2023 bonus kicks the can down the road. 

Pushing it into 23/24 really helps, as I expect to earn less that year than 22/23.
. 

zagfles

Maybe ask them for a statement of your PIAs (pension input amounts) for the last few tax years, if they're not already on your pension statments. You should be able to work it out from that, unless your March and previous April contributions were identical.

Grumpy_chap

I had exactly this question with regard to my own salary sacrifice pension contributions and both my Accountant plus my IFA stated that the contribution was considered for the annual allowance as per the date the funds land in the pension scheme.

This was of particular interest to me as I had enough remaining carry-forward allowance from three years ago to avoid biting into the new 2022-3 allowance.  My next pension contribution (for March earnings) will land in the pension on 6th or 7th April and will count as 2022-3 contributions.

My IFA advised:
"It is the date of receipt by the pension scheme which determines the tax year for annual allowance purposes (irrespective of the income/corporation tax deductibility date of payroll)."

My Accountant advised:
"For tax purposes the treatment is based on the date that items are received rather than the period they relate to. A classic example of this is dividends (where a dividend for the year ended 31st March is often not paid by companies until September)."

Hope that helps.

Jeremy535897

The link I posted says:

"Date contribution paid - net pay arrangements

The pension input amount for other money purchase arrangements includes the relievable pension contribution ‘paid during the pension input period’. The date of payment in the case of a contribution made under a net pay arrangement is the date of deduction from the employee’s pay (in the same way as for the member getting relief on relievable contributions ‘paid during the tax year’).

For annual allowance purposes, a scheme administrator may not readily be able to identify the date of deduction from pay from their member records. In these circumstances the scheme administrator may either use the date the money was received by the pension scheme or an estimate of the date the payment was deducted from salary for the purposes of determining:

• commencement dates for the first pension input period in respect of an arrangement, and
• details of pension input amounts attributable to pension input periods, which are provided to members either automatically or on request.

Where the scheme administrator issues a statement to a member on this basis, the member may rely on the information for Self Assessment purposes for annual allowance purposes."

zagfles

Jeremy535897 said:

The link I posted says:

"Date contribution paid - net pay arrangements

The pension input amount for other money purchase arrangements includes the relievable pension contribution ‘paid during the pension input period’. The date of payment in the case of a contribution made under a net pay arrangement is the date of deduction from the employee’s pay (in the same way as for the member getting relief on relievable contributions ‘paid during the tax year’).

For annual allowance purposes, a scheme administrator may not readily be able to identify the date of deduction from pay from their member records. In these circumstances the scheme administrator may either use the date the money was received by the pension scheme or an estimate of the date the payment was deducted from salary for the purposes of determining:

• commencement dates for the first pension input period in respect of an arrangement, and
• details of pension input amounts attributable to pension input periods, which are provided to members either automatically or on request.

Where the scheme administrator issues a statement to a member on this basis, the member may rely on the information for Self Assessment purposes for annual allowance purposes."

That's for net pay, not sal sac.

Jeremy535897

It seems the most analogous, but I agree that there seems to be nothing specific on salary sacrifice.