Paying 100% of a salary into a pension

krissy08

Hello all,

I have recently taken on a 2 day part time employment with a charity and I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.
I checked all the HMRC rules and with my current pension provider and cannot see anywhere prohibiting this- is that correct?
One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I also cannot find that this is a legal HMRC requirement. I should mention this arrangement is not a salary sacrifice scheme , it is simply me not wanting to have access to the money and giving it up directly into the pension. My understanding is that there would be no tax and N.I to pay... is that right or just N.I to pay? 

It's a really small charity and they have not done this before and I don't want to get screwed over in the process .

Thank you as always

OldBeanz

No reason you cannot.
Wife had to be paid 1p to generate a payslip.

biscan25

There aren't any material tax/NI implications of having more than one employment really. Tax will sort itself out, you'll probably get the tax code with no personal allowance for the second job.
You'll end up paying no NI in this job if you salary sacrifice down to minimum wage. (2 x 8 x 9.50) = £152 per week, which is less than the threshold.

You won't be able to salary sacrifice below NMW. Could the charity not do it this way?

Alternatively, could they take you on as a self-employed contractor? Then you could pay this into a personal pension yourself.

Dazed_and_C0nfused

krissy08 said:

Hello all,

I have recently taken on a 2 day part time employment with a charity and I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.
I checked all the HMRC rules and with my current pension provider and cannot see anywhere prohibiting this- is that correct?
One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I also cannot find that this is a legal HMRC requirement. I should mention this arrangement is not a salary sacrifice scheme , it is simply me not wanting to have access to the money and giving it up directly into the pension. My understanding is that there would be no tax and N.I to pay... is that right or just N.I to pay? 

It's a really small charity and they have not done this before and I don't want to get screwed over in the process .

Thank you as always

Not sure why you think you can get the employer to avoid NMW rules?

Audaxer

krissy08 said:

One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...

If you do have to receive a minimum wage from the second employer, presumably nothing stopping you paying that into a separate SIPP if you want to? 

zagfles

Dazed_and_C0nfused said:

krissy08 said:

Hello all,

I have recently taken on a 2 day part time employment with a charity and I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.
I checked all the HMRC rules and with my current pension provider and cannot see anywhere prohibiting this- is that correct?
One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I also cannot find that this is a legal HMRC requirement. I should mention this arrangement is not a salary sacrifice scheme , it is simply me not wanting to have access to the money and giving it up directly into the pension. My understanding is that there would be no tax and N.I to pay... is that right or just N.I to pay? 

It's a really small charity and they have not done this before and I don't want to get screwed over in the process .

Thank you as always

Not sure why you think you can get the employer to avoid NMW rules?

OP said it's not sal sac, so that's not an issue.

So it must either be net pay, where taxable income is reduced, but NI is still payable on the whole salary. Or a RAS (relief at source) scheme, where tax and NI are charged as normal on the entire salary and tax relief at basic rate is claimed by the pension scheme.

OP - which is it, do you know? Whichever, if you earn above the NI primary threshold (£242pw or 1048pm) you'll need to pay NI, if all your salary goes into the pension how is the employer going to deduct it?

Dazed_and_C0nfused

zagfles said:

Dazed_and_C0nfused said:

krissy08 said:

Hello all,

I have recently taken on a 2 day part time employment with a charity and I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.
I checked all the HMRC rules and with my current pension provider and cannot see anywhere prohibiting this- is that correct?
One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I also cannot find that this is a legal HMRC requirement. I should mention this arrangement is not a salary sacrifice scheme , it is simply me not wanting to have access to the money and giving it up directly into the pension. My understanding is that there would be no tax and N.I to pay... is that right or just N.I to pay? 

It's a really small charity and they have not done this before and I don't want to get screwed over in the process .

Thank you as always

Not sure why you think you can get the employer to avoid NMW rules?

OP said it's not sal sac, so that's not an issue.

So it must either be net pay, where taxable income is reduced, but NI is still payable on the whole salary. Or a RAS (relief at source) scheme, where tax and NI are charged as normal on the entire salary and tax relief at basic rate is claimed by the pension scheme.

OP - which is it, do you know? Whichever, if you earn above the NI primary threshold (£242pw or 1048pm) you'll need to pay NI, if all your salary goes into the pension how is the employer going to deduct it?

Can't see how it can be RAS given the start of the op.

I guess it could be net pay but that would be very unusual given the vast majority are DB schemes with prescribed contributions.  Could be AVC's via net pay maybe?

But that wouldn't achieve this.

 I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.

krissy08

can it be paid directly into the pension via a salary sacrifice scheme where the employers pension contrib union is capped at 5%?

Grumpy_chap

krissy08 said:

One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I should mention this arrangement is not a salary sacrifice scheme ,

The employer must pay you at least NMW - it is against employment law not to.
If this is not a SS scheme, what type of scheme is the pension contribution?

Marcon

krissy08 said:

Hello all,

I have recently taken on a 2 day part time employment with a charity and I have opted to have all the salary paid directly into my pension. This is because I have a full time employment elsewhere where I pay my full N.I and Tax and don't want the tax implications of having a second employment.
I checked all the HMRC rules and with my current pension provider and cannot see anywhere prohibiting this- is that correct?
One school of thought is that with the new employer I have to be paid minimum wage and then any extra can go into the pension- this does not suit my arrangements as I am already employed elsewhere...
I also cannot find that this is a legal HMRC requirement. I should mention this arrangement is not a salary sacrifice scheme , it is simply me not wanting to have access to the money and giving it up directly into the pension. My understanding is that there would be no tax and N.I to pay... is that right or just N.I to pay? 

It's a really small charity and they have not done this before and I don't want to get screwed over in the process .

Thank you as always

If this is a relief at source scheme (and almost certainly it will be, as it's a small charity, but please confirm), you will pay tax and NI on your earnings from the charity.  Pension contributions will be made out of post-tax pay, and the pension provider will claim tax relief on your behalf and add this to your pot with them.

Not sure what you think the 'tax implications' of having a second employment would be? If you choose to have all your personal allowance (or some of it) allocated to your second employment, you'll pay more tax in your other employment.

liz_bartun

Could you increase your pension contribution in your full time work's scheme to counter the earnings in the 2nd job?