HR saying I can't Salary Sacrifice Accrued Holiday (Redundancy)

(Previously Posted in error in Redundancy thread)

I'm in the finalisation stages of a redundancy which has a number of monetary components eg the redundancy payment (under tax free £30k), PILON and accrued holiday. 

(Throughout my 12 year employment I had taken up the opportunity to use the fabulous employee benefit of salary sacrificing  to  make EE 6% DC pension contribution to gain 14% ER contribution and in addition I also made by SS additional large monthly AVCs into same employer's DC pension scheme ....all with no problem and of course my employer was saving a huge amount of corp NI costs (sadly not shared with me).

During the redundancy consultation I checked in with my company pension scheme's Secretary to the Trustees and also the Company Staff Adviser (I work for a finance institution that runs its own DC pension scheme)....and asked what components of my "final monies" I would be able to SS....ie be compliant to HMRC annual allowance but also within my company's DC scheme rules.  Both confirmed that so long as the SS was actioned before my employment was terminated and that I had not exceeded hmrc allowances that SSing accrued holiday into Company DC was permissable.

However...HR dept has advised me today, that although they agree I may SS my £Pilon.....that I cannot SS my banked/accrued holiday.  I've emailed asking for explanation asap and request to discuss....
I've quoted the previous info from Company staff adviser and DC Pension'sSecretary to Trustees (who I've also emailed this morning asking for their thoughts).

Edit:  I did wonder if the reason was anything to do with minimum of holiday having to be taken ie employment law .....(but because I was on sick leave 1st Aug 2023 to 12th Jan 2024 I was not able to take holiday ie hence I've accrued an almost  full year of annual leave employer's annual leave calender runs April to March andvi had previously banked 30 days...5 per year....ie id always taken the minimum number of holiday required by law......until I was sick in August 2023).....but I can't see how there is a difference in paying an employee gross for accrued holiday versus allowing them to salary sacrifice?

So, anyone have any thoughts as to why HR would be saying I can't SS Accrued holiday please.  The gross figure of which is c£8k....which if included in my SS would not take me over my 2023/24 pension annual allowance.  All SS contributions are regarded as ER contributions.....I wonder if that is relevant.....can't see why though?

Thanks



Comments

  • molerat
    molerat Posts: 31,849 Forumite
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    edited 12 February at 3:41PM
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.
  • molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks

  • FIREDreamer
    FIREDreamer Posts: 319 Forumite
    First Post Name Dropper Photogenic
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks

    Can you ask them to pay it into your pension via the net pay method instead of salary sacrifice?
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    edited 12 February at 4:41PM
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks

    What makes you think you will be over-taxed in month 12?. If a cumulative code is in operation and it's paid in month 12 you will have paid the correct amount of tax.  

    When do you anticipate it being paid?
  • Marcon
    Marcon Posts: 10,661 Forumite
    First Post First Anniversary Name Dropper Combo Breaker
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks

    Payroll's hand are tied on this one - no.

    If it's being paid before the end of this tax year (and you've confirmed it is), at worst the HMRC 'assumption' will be that you are earning an extra £8K x 2 (February and March), so if you've already sacrificed down to minimum wage, it's unlikely the tax would put you into the higher rate tax bracket. 

    You can make a prompt reclaim to try and speed things up once the tax has been deducted: https://www.gov.uk/claim-tax-refund
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Hoenir
    Hoenir Posts: 2,060 Forumite
    First Post Name Dropper
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary....
    Not remotely close to how the real world operates. 
  • molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.
    Hi Molerat,
    Just another thought/question from me:  I'm thinking tthat my 30 banked days are different to the 28 accrued 2023/24 days:  I was only allowed to bank 5 days  per year because I had to take the requisite minimum number of days holiday....ie my employer has previously given me (and ive taken the statutory minimum) annual leave for 2022/23 and five years backwards.  So because the banked holiday relates to holiday years in which i did definitely take the minimum holiday does that mean that my employer has divested itself of its obligations re the banked days and I should be able to salary sacrifice the banked days.

    Thanks
  • BoGoF
    BoGoF Posts: 7,099 Forumite
    Name Dropper First Anniversary First Post
    Perhaps there is an argument you could salary sacrifice the pay for any non-statutory holidays but is your employer obliged to? There was no obligation on them to allow you to bank your unused days.
  • BoGoF said:
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks

    What makes you think you will be over-taxed in month 12?. If a cumulative code is in operation and it's paid in month 12 you will have paid the correct amount of tax.  

    When do you anticipate it being paid?
    Hi, my last monthly salary and redundancy monies will be paid End of Feb 2024
  • Exodi
    Exodi Posts: 2,864 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    molerat said:
    You pretty much answered your own question in the edit.
    By sacrificing the holiday the employer would not be giving you that statutory requirement, whether in days off or cash to cover those days off after you have left.  Similar to not being allowed to sacrifice below the statutory minimum wage.

    Many thanks....b*gger it.  Please may I ask if there is anyway of getting a Payroll  dept when they process last salary payment of confirming to HMRC that the £8k is a one off  accrued holiday payment and not my "new gross" monthly salary.....ie I'm trying to avoid it being assumed that I'm now earning an extra 12x£8k a year and being taxed at higher rate rather than basic rate (I salary sacrifice down to Nat min wage).....and then having to wait for HMRC to make necessary correction and refund.

    Separately I note that the one off £8k will increase my 2023/24 net earnings so I can make a net 0.8 of the £8k payment into my SIPP and at least getting basic tax relief added.

    Thanks
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