Salary sacrifice or direct contributions??

housebuyer143

Which is the best option in my case? 

I am not a tax payer but sacrifice part of my salary for pension to bring my income down enough to get carers allowance. I get no tax benefit doing this.

I can alternatively make direct contributions into one of my active pensions from previous employment. If I do this, do I get a 20% credit on any payment I make to account?

My work contribute nothing to the scheme as this is extra and I'm already doing a direct benefit pension with them which I will continue.

Phoenix72

Intrigued how you can sacrifice your earnings below personal allowance without breaching NMW legislation.....unless you are part time?

Albermarle

Also normally salary sacrifice is for  workplace pensions, not for personal pensions ?

housebuyer143

Albermarle said:

Also normally salary sacrifice is for  workplace pensions, not for personal pensions ?

Yes, I currently salary sacrifice through my work, but I am wondering if direct contributions to my personal pension is the better option.

housebuyer143

Phoenix72 said:

Intrigued how you can sacrifice your earnings below personal allowance without breaching NMW legislation.....unless you are part time?

I work part time.

Phoenix72

What are the pre and post sacrifice figures?

housebuyer143

Phoenix72 said:

What are the pre and post sacrifice figures?

I haven't decided how much to contribute yet, but I currently earn less than NMW an hour with the contributions I currently make and no one seems to care at my work 🤷‍♀️ 

HappyHarry

If you are not getting taxed on your income then a salary sacrifice arrangement is of no benefit, and you would be better making a personal contribution to an existing pension. 

Of course, you should first of all maximise your employer's contribution to your workplace pension. However, above that limit then personal contributions are better as they will attract tax relief at 20% even though you do not pay tax. 

housebuyer143

HappyHarry said:

If you are not getting taxed on your income then a salary sacrifice arrangement is of no benefit, and you would be better making a personal contribution to an existing pension. 

Of course, you should first of all maximise your employer's contribution to your workplace pension. However, above that limit then personal contributions are better as they will attract tax relief at 20% even though you do not pay tax. 

Thank you, that's what I wanted to know. I will see how easy this is with carers and then proceed with that option 👍

Marcon

housebuyer143 said:

HappyHarry said:

If you are not getting taxed on your income then a salary sacrifice arrangement is of no benefit, and you would be better making a personal contribution to an existing pension. 

Of course, you should first of all maximise your employer's contribution to your workplace pension. However, above that limit then personal contributions are better as they will attract tax relief at 20% even though you do not pay tax. 

Thank you, that's what I wanted to know. I will see how easy this is with carers and then proceed with that option 👍

Don't forget that you can only deduct 50% of your pension contributions as an 'expense' - the rest counts towards earnings for the purposes of carer's allowance.

Phoenix72

housebuyer143 said:

Phoenix72 said:

What are the pre and post sacrifice figures?

I haven't decided how much to contribute yet, but I currently earn less than NMW an hour with the contributions I currently make and no one seems to care at my work 🤷‍♀️ 

They will care if HMRC find out.