Salary Sacrifice, Min Wage and BIK

dean350

I want to max out my pension contributions over the next few years using salary sacrifice. I am aware that you cannot sacrifice down to lower than the minimum wage which is about 20K a year  these days for a 37 hr per week position. However, can you sacrifice down to say 16K and then use the value of benefits in kind ( car and medical provided) to get you back up above the minimum wage level?

Pat38493

I already asked this question a while ago.  The consensus answer was that no benefits in kind don't count so you have to keep the actual salary above minimum wage (although there was a one or two who seemed to think the opposite).

I am doing this for a couple of months and I calculated it ignoring the car allowance.  I am on 80% contributions at the moment.  Actually last salary I got negative tax, presumably because if I continued to pay 80% rest of the tax year, I have already paid too much tax.

Linton

https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm09130 says benefits in kind do not count toards minimum wage excerpt for work related accommodation.

dean350

Thanks all. Thats clear. Sal sac down to min wage and then pay tax on min wage+ the value of the BIK.

zagfles

You could always pay the value of the BIK as a normal employee contribution (ie NOT sal sac), or into a SIPP etc. You don't pay employee NI on BIKs anyway, so you don't lose out on NI savings