Salary sacrifice .. Employer payment......

sgx2000

My ex workplace pension account shows all my pension conntributions as being employer contributions.   Does this mean they are not counted for tax relief purposes?

Dazed_and_C0nfused

sgx2000 said:

My ex workplace pension account shows all my pension conntributions as being employer contributions.   Does this mean they are not counted for tax relief purposes?

You cannot get any pension tax relief on employer contributions.

If you have sacrificed salary in return for some of those contributions then you could well have avoided paying tax and NI on the salary you no longer have.

Marcon

sgx2000 said:

My ex workplace pension account shows all my pension conntributions as being employer contributions.   Does this mean they are not counted for tax relief purposes?

You haven't paid tax on them in the first place, so there's no personal tax relief available.

Employer pension contributions are always paid gross to the pension provider, so there's no tax relief to add. The employer gains any tax relief through corporation tax.

MDMD

Marcon said:

sgx2000 said:

My ex workplace pension account shows all my pension conntributions as being employer contributions.   Does this mean they are not counted for tax relief purposes?

You haven't paid tax on them in the first place, so there's no personal tax relief available.

Employer pension contributions are always paid gross to the pension provider, so there's no tax relief to add. The employer gains any tax relief through corporation tax.

Although the employer would get CT relief on the payment whether it was salary or pension - they benefit through there being no NI applicable on pension payments.

sgx2000

I took voluntary redundancy 3 months ago. 
My Aviva pension shows 3 months of employer contributions.. 
Does that mean I could add up to my earned gross to my pension and ignore the employers 3 months contributions?

Marcon

sgx2000 said:

I took voluntary redundancy 3 months ago. 
My Aviva pension shows 3 months of employer contributions.. 
Does that mean I could add up to my earned gross to my pension and ignore the employers 3 months contributions?

You'd add up to 80% of your earned gross pay - the pension provider would then claim basic rate tax on your behalf, which would bring you up to the 100% of your gross pay.

That assumes your contributions + the employer contributions in the current tax year don't exceed the Annual Allowance of £60K and that you aren't subject to the Money Purchase Annual Allowance*, which would restrict you to gross contributions of £10K per annum (again including employer contributions).

*normally triggered if you take anything in excess of tax free cash from a defined contribution scheme, unless under the 'small pots' regime.

There's never a nice simple yes/no answer in pensions, is there?!

sgx2000

So I don't have to deduct the pension already  paid by my ex employer from the 80% mentioned above?

kimwp

I think you need to make sure you understand the difference between tax relief and employer contributions, on which no tax has been paid.

Overall, the money paid into your pension and/or back to you as tax relief needs* to not exceed the lower of
- your relevant UK earnings this year
- the annual allowance plus any "leftover" allowance from the last three years.

It doesn't matter who pays the money into your pension - employer, you, random long lost uncle, it all counts.

Edit:
*(in order to not pay tax on it. Anything over this will be taxed)

Dazed_and_C0nfused

kimwp said:

I think you need to make sure you understand the difference between tax relief and employer contributions, on which no tax has been paid.

Overall, the money paid into your pension and/or back to you as tax relief needs to not exceed the lower of
- your relevant UK earnings this year
- the annual allowance plus any "leftover" allowance from the last three years.

It doesn't matter who pays the money into your pension - employer, you, random long lost uncle, it all counts.

Are you quite sure about that?

If it was correct then someone earning say £60k wouldn't be able to salary sacrifice down to NMW as they would have had ~£36k added to their pension yet only £24k in taxable earnings.

And as far as I'm aware any personal tax relief/saving you benefit from isn't counted in either element.

kimwp

Dazed_and_C0nfused said:

kimwp said:

I think you need to make sure you understand the difference between tax relief and employer contributions, on which no tax has been paid.

Overall, the money paid into your pension and/or back to you as tax relief needs to not exceed the lower of
- your relevant UK earnings this year
- the annual allowance plus any "leftover" allowance from the last three years.

It doesn't matter who pays the money into your pension - employer, you, random long lost uncle, it all counts.

Are you quite sure about that?

If it was correct then someone earning say £60k wouldn't be able to salary sacrifice down to NMW as they would have had ~£36k added to their pension yet only £24k in taxable earnings.

And as far as I'm aware any personal tax relief/saving you benefit from isn't counted in either element.

@dazed, which bit?

Dazed_and_C0nfused

kimwp said:

Dazed_and_C0nfused said:

kimwp said:

I think you need to make sure you understand the difference between tax relief and employer contributions, on which no tax has been paid.

Overall, the money paid into your pension and/or back to you as tax relief needs to not exceed the lower of
- your relevant UK earnings this year
- the annual allowance plus any "leftover" allowance from the last three years.

It doesn't matter who pays the money into your pension - employer, you, random long lost uncle, it all counts.

Are you quite sure about that?

If it was correct then someone earning say £60k wouldn't be able to salary sacrifice down to NMW as they would have had ~£36k added to their pension yet only £24k in taxable earnings.

And as far as I'm aware any personal tax relief/saving you benefit from isn't counted in either element.

@dazed, which bit?

Primarily this in bold,

Overall, the money paid into your pension and/or back to you as tax relief needs to not exceed the lower of

- your relevant UK earnings this year

- the annual allowance plus any "leftover" allowance from the last three years.

It doesn't matter who pays the money into your pension - employer, you, random long lost uncle, it all counts.