NI savings with pension 28 December 2022 at 11:38AM in Cutting tax 4 replies 163 views

CRAIGEMMA

Hi I am struggling to get answer with this.
I am high rate tax payer and pay into my work pension maxing out on employer contributions with what I put in.
I have a SIPP where my old work pension is. Happy with this.
I currently pay extra over and above what would max my employer to match at my work place pension of around £300 a month extra but fund choice is restricted.
I am considering stopping this and paying into my SIPP where I can pick my own choice of funds.
I'm aware of self assessment  fine with all this but my question simply is based on above 

What am I saving in NI currently doing this via my work at £300pm v sipp

To me it's a case of trade of better fund choices but lose on NI saving but need to know really what the loss actually is. 

TheAble

Assuming you do your work one via salary sacrifice. Contributing the £300 through work will save you whatever you would have paid in NI on the 300. Just plug the numbers into an online tax calculator to see (depends on your earnings/bandings). 

Additionally your work may pay in their employer NI saving but that will depend on their policy. 

Dazed_and_C0nfused

Personal contributions into a pension don't save NI.

Presumably you aren't currently contributing to the pension but are agreeing to a lower salary in return for increased employer contributions.

There is no pension tax (or NI) relief by doing this as they are employer contributions.

The tax (and NI) saving comes from not having the income in the first place.

CRAIGEMMA

Thanks for responding 

My employer will match my contribution up to 10%.

On my payslip under income it has my salary and below it a - pension figure (my contribution) then a lower gross at below and then I am taxed on it.

At moment I pay in more than the 10% but will punch it into a calculator to see difference. 

p00hsticks

TheAble said:

Assuming you do your work one via salary sacrifice.

Dazed_and_C0nfused said:

Presumably you aren't currently contributing to the pension but are agreeing to a lower salary in return for increased employer contributions.

It doesn't sound like the OP is in a salary sacrifice scheme