Increasing contribution to the new annual allowance of £60k

Pursuit

I currently contribute the full £40k via salary sacrifice (Salary is £58k) and employer contributions (9.5%) . Added to this I have had a DB pension (£15.5k) in payment that basically adds to my overall salary. This combo has been relatively straight forward to manage and my pension has always been taxed at the lower 20% rate.

If I increase my salary sacrifice contribution so that the new limit of £60k is reached, how will the tax on my pension be applied going forward. i.e. will the new contribution automatically reduce my tax liability?    

Just trying to understand if its likely that my full DB pension will still be liable for the same 20% tax or given my new adjusted salary my personal allowance will now have an impact on how much tax my DB pension provider deducts.
  
Thanks

  

    

molerat

You cannot sal sac to below NMW

retiringtoosoon

Approx £1.7k taxable income per month for your bog standard 38 hrs per week dude 

Pursuit

molerat said:

You cannot sal sac to below NMW

Does my combined Salary and Pension have any bearing on this i.e. are they viewed as a total income?   

Triumph13

Pursuit said:

molerat said:

You cannot sal sac to below NMW

Does my combined Salary and Pension have any bearing on this i.e. are they viewed as a total income?   

Your pension is what you are paid for your past work.  Your salary is what you are paid for your current work and it's illegal for that to be below NMW

Pursuit

Triumph13 said:

Pursuit said:

molerat said:

You cannot sal sac to below NMW

Does my combined Salary and Pension have any bearing on this i.e. are they viewed as a total income?   

Your pension is what you are paid for your past work.  Your salary is what you are paid for your current work and it's illegal for that to be below NMW

Thanks, looks like I've been skating close to the fence without realising it!!

NedS

Pursuit said:

Triumph13 said:

Pursuit said:

molerat said:

You cannot sal sac to below NMW

Does my combined Salary and Pension have any bearing on this i.e. are they viewed as a total income?   

Your pension is what you are paid for your past work.  Your salary is what you are paid for your current work and it's illegal for that to be below NMW

Thanks, looks like I've been skating close to the fence without realising it!!

It's the employers responsibility not to allow you to SalSac below NMW as they are the one's who would be breaking the law by paying you less than minimum wage. I think most payroll departments will bounce your request if it takes you below NMW.

Dazed_and_C0nfused

Pursuit said:

I currently contribute the full £40k via salary sacrifice (Salary is £58k) and employer contributions (9.5%) . Added to this I have had a DB pension (£15.5k) in payment that basically adds to my overall salary. This combo has been relatively straight forward to manage and my pension has always been taxed at the lower 20% rate.

If I increase my salary sacrifice contribution so that the new limit of £60k is reached, how will the tax on my pension be applied going forward. i.e. will the new contribution automatically reduce my tax liability?    

Just trying to understand if its likely that my full DB pension will still be liable for the same 20% tax or given my new adjusted salary my personal allowance will now have an impact on how much tax my DB pension provider deducts.
  
Thanks

  

    

Unless you work part time hours nothing should change tax wise as you will need to earn well above the Personal Allowance due to NMW rules.

So the pension tax deductions should remain 20%.

Scot_39

On OPs £58k pre-sacrifice gross - the employers 9.5% - is c£5.5k - so guess sacrifices c£34.5K - leaving £23.5k.

Wow thats a lot of tax and NI relief - for you - even more in NI terms for your employer (not sure I agree with that part)

So closer to the wire than the OP knew existed - but I am guessing that payroll would.

Op would have to look at actual hourly rates I guess to work out exactly - but around ave hours - min wage - £9.50 for 23+ currently c18.6K at say 37.5pw - about to rise to   £10.42ph --> c£20.4k pa

So if that is right way to look at it - OP could boost a little more - maybe just another £3k - nowhere near the full £20 - depending on their hrs ?

But then would have to monitor the differential carefully in future (given min wage risen far more than average in many recent years)