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Salary Sacrifice timings
Comments
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I have looked at the link Jeremy provided.
The latest remittance advice from my employer to the pension fund states "Payment Method BACS".
That is not specifically referenced under the "deemed date of contributions" list within Jeremy's link though I think would fall under the category "Faster Payment" which the Gov / HMRC list simply said was too complicated.
However, by looking at what happens in the case of my employer, the pension contributions for any payroll within 6th Feb to 5th March was collated together and processed after 5th March and the Remittance Date stated as 7th March. With the system working like that, the pension contributions for any month will always be classed as landing in the following tax month.
I suspect the employer does the processing in that way exactly as per tax months so that there can never be any substantive query as to which tax period the pension contributions deemed payment is made. It is always in the "next" period after the "earned" period. If the transfers were processed on 1st of each month then, depending on weekend and Bank Holiday impacts, payments could land differently (in terms of tax-periods) from month to month.
Other companies may operate in different cycles resulting in different outcomes.0 -
Jeremy535897 said:Thinking more about this, I wonder whether the salary sacrifice element is a bit of a red herring, and the contribution is treated as made according to the normal rules that apply to any employer contribution? Those rules are set out in the Pensions Tax Manual already referred to earlier, at https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000#IDA0QUFG and they examine when the different types of payment are treated as made.
The one caveat I will add here is I don't like going by HMRC manuals. Even HMRC sometimes get it wrong.
"Real knowledge is to know the extent of one's ignorance" - Confucius1 -
kinger101 said:I wouldn't say it's a red herring --- more a pertinent fact. It makes it an employer contribution, so the deemed payment date will be when the transfer is made to the scheme and not the date that the pay is sacrificed.
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Think I've decided on my strategy now. The 60% tax and loss of some of the childcare benefits are inevitable, so I'll keep 2022/2023 <£100K, but after that accept the eyewatering marginal rate on a proportion of the income. It's not the most tax-efficient approach, but postponing the exercise of RSUs has its own risks. This way I can unlock the golden handcuffs as soon as I'm given the key.
"Real knowledge is to know the extent of one's ignorance" - Confucius0
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