Employers NI on pension contributions?

pterri

I’m on course to get the full SP on top of my decent DP. Do I want taxes to go up on me or my employer that could ripple down to a lower salary increase? No. Do I want the SP to retain the triple lock? Yes please. If tax and spend were easy then there would be no need for a treasury. We can’t have nice things without the £££££

Albermarle

HerbieM said:

So if employer pays in 3% (let’s say £90)
Employee pays in £150

but it all goes via salary sacrifice as employer contribution no NI to be paid on either part?

If NI is charged on Employer contributions at higher rate than employer contributions then salary sacrifice no longer has any benefit so payments would be switched to Employee contribution and incur the lower rate NI (a tax on working people!) and Employer contribution at the higher rate.

or am I missing something?

No, this is part of what is being thought about I guess. If due to budget changes an employer changes away from salary sacrifice, then the employees will have to pay more NI than before.

However the NI on employer pension contributions could be set at a lower rate than normal, say 5%, hence retaining the viability of running the scheme, and bringing some income to the Treasury.

The mushrooming of salary sacrifice schemes for pensions, is costing the Treasury Billions in lost NI every year.
So this could be a way of partly addressing that loss.

hugheskevi

Albermarle said:

The mushrooming of salary sacrifice schemes for pensions, is costing the Treasury Billions in lost NI every year.
So this could be a way of partly addressing that loss.

The latest HMRC estimates have very interesting information on the potential size of the pie from employer NI on salary sacrifice contributions, all contributions, and what share of the total is made up from public sector employer contributions.

intalex

hugheskevi said:

Albermarle said:

The mushrooming of salary sacrifice schemes for pensions, is costing the Treasury Billions in lost NI every year.
So this could be a way of partly addressing that loss.

The latest HMRC estimates have very interesting information on the potential size of the pie from employer NI on salary sacrifice contributions, all contributions, and what share of the total is made up from public sector employer contributions.

With these numbers and the alleged size of the hole that they need to fill, limiting salary sacrifice to the minimum 3% + 5% of base salary can't exactly be considered unfair, especially given that employer NI savings from discretionary salary sacrifice don't always get passed on to employees. Income tax relief will continue to remain the major incentive for employees regardless.

intalex

It's announced, effective April 2029 any salsac above £2,000 will attract both E'er and E'ee NI...

More surprising thing is the value this will generate £4.7bn despite taking effect a few years down the line...