Net Pay or Relief at Source Issue if Part Time Worker

[Deleted User]

Hi

I'd really appreciate your thoughts and opinions.

BACKGROUND

I currently work full time (35 hrs) £42k notional salary.
I salary sacrifice 8% (+ 12% employer Pension contributions) into employer's DC scheme.  I also salary sacrifice to make further  AVC contributions reducing my "gross" salary to UK minimum wage. 

Then at end of each tax year I also:

- pay the nett of (my personal allowance ie 12,570) into my SIPP which then attracts tax relief

 - pay an end of year non salary sacrifice  AVC comprising........the nett of (my post salary sacrifice gross minus my personal allowance) into my employer's DC scheme and then the tax is added.

QUESTION

IF for my last year before retirement I reduce my hours to 60% ie 21 hours but still salary sacrifice down to (now pro rata'd) minimum wage which means that my gross (post salary sacrifice) is now below my income tax personal allowance (by a few pounds), could I still at the end of the tax year:

1.  Pay the net of my gross earnings into my SIPP (& still get the tax relief added)

Therefore, I assume having paid no income tax that there is no further input allowable into my Employer DC?

Another Question: By salary sacrificing down to the pro rata'd min wage and hence under tax and NI levels..... I would also not being paying  NI contributions for the one year that I will work part time......so if (and it is possible) I was made redundant after going part time, would I be ineligible for contribution based JSA?   ('Appreciate I want to have my cake and eat it for 6 months)

NoMore

You can get tax relief on 100% of your gross income, even if you earn less than the personal allowance.

Dazed_and_C0nfused

I'm not sure what the real difference is between what you are doing now and propose doing?

Maybe you could be a bit more specific about what you think might be an issue?

NB.  There is absolutely no connection between the income tax you have paid and the pension tax relief you can get under the relief at source method.

NedS

mulberryellie said:

Another Question: By salary sacrificing down to the pro rata'd min wage and hence under tax and NI levels..... I would also not being paying  NI contributions for the one year that I will work part time......so if (and it is possible) I was made redundant after going part time, would I be ineligible for contribution based JSA?   ('Appreciate I want to have my cake and eat it for 6 months)

As long as your NI assessed salary is above the LEL (£123 per week), then those weeks counts even if you have paid no NI.

Further, claims for contributions-based JSA are based on the last two relevant tax years, so would not be looking at NI conts in the current tax year in which you make your claim. So yes, you would likely be eligible for JSA so long as you are actively seeking employment. But would you really be looking for another job if made redundant 6 months before you were planning to retire?