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Salary Sacrifice and National Minimum Wage Time period
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As D&C says, you are not understanding how it works. To fully elimate HR tax on £45k you need to make a SIPP contribution of £36,000. This is then grossed up to £45,000 and extends your basic rate band by £45k meaning you pay 20% tax on £45k instead of 40%, saving you £9,000. You have £45k in your pension scheme that only effectively cost you £27k (£9k tax relief added by HMRC and the tax reduction of £9k).0
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Phoenix72 said:As D&C says, you are not understanding how it works. To fully elimate HR tax on £45k you need to make a SIPP contribution of £36,000. This is then grossed up to £45,000 and extends your basic rate band by £45k meaning you pay 20% tax on £45k instead of 40%, saving you £9,000. You have £45k in your pension scheme that only effectively cost you £27k (£9k tax relief added by HMRC and the tax reduction of £9k).
Thanks, I get it now.
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