pension contributions and universal credit

WillowCat

itsocomplex said:

Thank you all so much for your guidance.  I do have another question and Im not sure if anyone can help - I think I remember reading that any meal allowance was deductible as well, does anyone know where the documentation is to support this - is of course I am correct

If your employer pays you a meal allowance as a non taxable expense then this should not be reported as part of your taxable pay when your employer gives the figures to HMRC.

The only deductions from gross taxable income that are taken into account for UC are tax, national insurance contributions and relievable pension contributions.

calcotti

Albermarle said: Interesting. So in theory someone borderline ineligible for UC, could contribute to a pension and get some UC?

In other words the UC would be funding the pension contributions indirectly?

Although surprising, yes.

german_keeper

I remember a few years ago a colleague of mine, who worked in the team responsible for the legal side of tax credits, telling me that one of the big issues they had, and legally had to advise that nothing could be done about it, was people on decent salaries who paid large pension contributions receiving large amounts of tax credits. A lot of the cases came from the same employers. At the time I didn't know about salary sacrifice but now I suspect that's probably also what they were doing.   

calcotti

german_keeper said:

I remember a few years ago a colleague of mine, who worked in the team responsible for the legal side of tax credits, telling me that one of the big issues they had, and legally had to advise that nothing could be done about it, was people on decent salaries who paid large pension contributions receiving large amounts of tax credits. A lot of the cases came from the same employers. At the time I didn't know about salary sacrifice but now I suspect that's probably also what they were doing.   

There would have been no need to do salary sacrifice. Any pension contributions could be taken into account and would reduce the income taken into account when calculating the Tax Credits payable.

german_keeper

calcotti said:

german_keeper said:

I remember a few years ago a colleague of mine, who worked in the team responsible for the legal side of tax credits, telling me that one of the big issues they had, and legally had to advise that nothing could be done about it, was people on decent salaries who paid large pension contributions receiving large amounts of tax credits. A lot of the cases came from the same employers. At the time I didn't know about salary sacrifice but now I suspect that's probably also what they were doing.   

There would have been no need to do salary sacrifice. Any pension contributions could be taken into account and would reduce the income taken into account when calculating the Tax Credits payable.

Yes I know that; it's why I used the word also. My point was that employers who were so clued up with the rules would probably be all over salary sacrifice as well. 

calcotti

german_keeper said:

calcotti said:

german_keeper said:

I remember a few years ago a colleague of mine, who worked in the team responsible for the legal side of tax credits, telling me that one of the big issues they had, and legally had to advise that nothing could be done about it, was people on decent salaries who paid large pension contributions receiving large amounts of tax credits. A lot of the cases came from the same employers. At the time I didn't know about salary sacrifice but now I suspect that's probably also what they were doing.   

There would have been no need to do salary sacrifice. Any pension contributions could be taken into account and would reduce the income taken into account when calculating the Tax Credits payable.

Yes I know that; it's why I used the word also. My point was that employers who were so clued up with the rules would probably be all over salary sacrifice as well. 

I see now what you were getting at.

Dazed_and_C0nfused

german_keeper said:

I remember a few years ago a colleague of mine, who worked in the team responsible for the legal side of tax credits, telling me that one of the big issues they had, and legally had to advise that nothing could be done about it, was people on decent salaries who paid large pension contributions receiving large amounts of tax credits. A lot of the cases came from the same employers. At the time I didn't know about salary sacrifice but now I suspect that's probably also what they were doing.   

Salary sacrifice results in additional pension contributions being paid by the employer not the employee so they definitely wouldn't be deductable for UC purposes.

But the employee would have a lower salary to declare.