Salary Sacrifice

Superhoopza

penners324 said:

Your savings will be 42% or 32%

51% with my student loan deductions not coming off (although I understand I'll end up paying for this eventually in the long run and more with interest). But 51% off the salary sacrifice value.

Thanks all. I'll ask my employer.

lisyloo

Superhoopza said:

BoGoF said:

Look at it this way. Before sacrifice say your gross taxable income was £6000 per month but you then sacrifice £1000 taking your gross taxable to £5000 so obviously your take home pay is going to be less as your salary is less. The £1000 goes to your pension at a net cost to you of £580. That is how the salary sacrifice 'savings' work.

Edit: I think I know what you mean now. How are your current pension contributions dealt with?

They are a percentage of my gross salary and deducted from my net pay. So that same value will be taken off my gross, moved straight to my pension pot and I save the tax liability on that value.

are you sure you haven't been missing out on higher rate tax relief?
pension schemes claim basic tax relief for you (they don't do it at different rates for different people).
It's up to you to claim back the higher rate tax relief from HMRC.

The easiest way to check this is to compare how much your pay was deducted with what appeared on your pension statement.
For example if you paid £80 and theres £100 in your pension then you've missed out historically on the higher rate relief.
You can back claim a few years.

Superhoopza

lisyloo said:

Superhoopza said:

BoGoF said:

Look at it this way. Before sacrifice say your gross taxable income was £6000 per month but you then sacrifice £1000 taking your gross taxable to £5000 so obviously your take home pay is going to be less as your salary is less. The £1000 goes to your pension at a net cost to you of £580. That is how the salary sacrifice 'savings' work.

Edit: I think I know what you mean now. How are your current pension contributions dealt with?

They are a percentage of my gross salary and deducted from my net pay. So that same value will be taken off my gross, moved straight to my pension pot and I save the tax liability on that value.

are you sure you haven't been missing out on higher rate tax relief?
pension schemes claim basic tax relief for you (they don't do it at different rates for different people).
It's up to you to claim back the higher rate tax relief from HMRC.

The easiest way to check this is to compare how much your pay was deducted with what appeared on your pension statement.
For example if you paid £80 and theres £100 in your pension then you've missed out historically on the higher rate relief.
You can back claim a few years.

Thank you very much for pointing this out! I believe I am not getting the extra 20% because my pension contribution is a % of my gross salary but I am then taxed on the full amount of my gross salary. 

I moved into this tax bracket in May 2022. Can I only complete a return for a full tax year? I.e. only April 22-march 23 and then have to wait until April 24 to do the 2023/24 return.

Also it is best to do this via the self assessment tool or by sending a letter to HMRC?

Thanks so much for telling me about this!

lisyloo

Yes you can only do a full year.
I don't think you can self-select for self assesment. They might not want to do it for just one thing (they didn't for me).
Personally I would send a letter to HMRC as like everywhere else, trying to phone is a PITA.

Dazed_and_C0nfused

Superhoopza said:

lisyloo said:

Superhoopza said:

BoGoF said:

Look at it this way. Before sacrifice say your gross taxable income was £6000 per month but you then sacrifice £1000 taking your gross taxable to £5000 so obviously your take home pay is going to be less as your salary is less. The £1000 goes to your pension at a net cost to you of £580. That is how the salary sacrifice 'savings' work.

Edit: I think I know what you mean now. How are your current pension contributions dealt with?

They are a percentage of my gross salary and deducted from my net pay. So that same value will be taken off my gross, moved straight to my pension pot and I save the tax liability on that value.

are you sure you haven't been missing out on higher rate tax relief?
pension schemes claim basic tax relief for you (they don't do it at different rates for different people).
It's up to you to claim back the higher rate tax relief from HMRC.

The easiest way to check this is to compare how much your pay was deducted with what appeared on your pension statement.
For example if you paid £80 and theres £100 in your pension then you've missed out historically on the higher rate relief.
You can back claim a few years.

Thank you very much for pointing this out! I believe I am not getting the extra 20% because my pension contribution is a % of my gross salary but I am then taxed on the full amount of my gross salary. 

I moved into this tax bracket in May 2022. Can I only complete a return for a full tax year? I.e. only April 22-march 23 and then have to wait until April 24 to do the 2023/24 return.

Also it is best to do this via the self assessment tool or by sending a letter to HMRC?

Thanks so much for telling me about this!

There isn't always an "extra 20%" though.

It depends how much higher rate tax you would be liable at without the pension contributions.

If you have made relief at source contributions (where the pension company adds 25% to your contribution) then you can claim any higher rate relief by contacting HMRC.  Claiming higher rate relief isn't a reason in itself to file a tax return.

But if you file one for some other reason then you would include the RAS contributions on the return.

Other than the tax year you die a tax return is always for a complete tax year.  And you include all relevant information for that tax year.

Superhoopza

Thanks all, I'll write a letter for the 2022-23 tax year and do a further one after 6th April 2024 for the previous year.

Archerychick

Superhoopza said:

Thanks all, I'll write a letter for the 2022-23 tax year and do a further one after 6th April 2024 for the previous year.

I just called them up with the details and they made the adjustments on the phone there & then. Received the refund a few weeks later

lisyloo

Archerychick said:

Superhoopza said:

Thanks all, I'll write a letter for the 2022-23 tax year and do a further one after 6th April 2024 for the previous year.

I just called them up with the details and they made the adjustments on the phone there & then. Received the refund a few weeks later

was that per-pandemic/brexit.
My personal experience is that pretty much everything involving service is badly broken in this country.

Superhoopza

Archerychick said:

Superhoopza said:

Thanks all, I'll write a letter for the 2022-23 tax year and do a further one after 6th April 2024 for the previous year.

I just called them up with the details and they made the adjustments on the phone there & then. Received the refund a few weeks later

Do they not need to verify any information you gave them on the phone?

[Deleted User]

Superhoopza said:

Archerychick said:

Superhoopza said:

Thanks all, I'll write a letter for the 2022-23 tax year and do a further one after 6th April 2024 for the previous year.

I just called them up with the details and they made the adjustments on the phone there & then. Received the refund a few weeks later

Do they not need to verify any information you gave them on the phone?

No - they don’t. If, ultimately, it proves to be incorrect HMRC will seek redress.