AVC-PSE-Mimimum Wage

nilocmac

I have been paying AVCs through payroll for the last number of years.  It has been on the Gross side of my payslip as my company have been using PSE. 

However with the mimimum wage rising it had moved to the net side.  (I think it would work out that I could pay £10 AVC and still be in PSE).  I want to pay £50 or so and am unsure what to do.  Do I lose the tax benefit.  I hope this is clear.  

I will also be taking my age 60 company pension in a number of months and possibly a lump sum.

Marcon

nilocmac said:

I have been paying AVCs through payroll for the last number of years.  It has been on the Gross side of my payslip as my company have been using PSE. 

However with the mimimum wage rising it had moved to the net side.  (I think it would work out that I could pay £10 AVC and still be in PSE).  I want to pay £50 or so and am unsure what to do.  Do I lose the tax benefit.  I hope this is clear.  

I will also be taking my age 60 company pension in a number of months and possibly a lump sum.

You don't lose the (income) tax benefit whether you make a personal contribution or contribute by salary exchange. The advantage of salary exchange is a saving in NI on the amount you sacrifice.

dasherman

nilocmac said:

I have been paying AVCs through payroll for the last number of years.  It has been on the Gross side of my payslip as my company have been using PSE. 

However with the mimimum wage rising it had moved to the net side.  (I think it would work out that I could pay £10 AVC and still be in PSE).  I want to pay £50 or so and am unsure what to do.  Do I lose the tax benefit.  I hope this is clear.  

I will also be taking my age 60 company pension in a number of months and possibly a lump sum.

It sounds like you work for Royal Mail, as their version of salary sacrifice is called Pension Salary Exchange(PSE).

Most posties still get paid weekly, so an easy way to work out the maximum AVC contribution to stay within PSE, is to subtract the rate of the minimum wage from your basic hourly rate and then multiple by your basic hours worked.

For example:

13.50 – 11.44 x 37 = 57.72

Only include your basic pay and not any allowances or overtime and also factor in any payments you make that also potentially benefit from salary sacrifice, such as the Lump Sum Booster or the Partnership & Matching share scheme.

You can pay a higher rate of AVC's if you want to, but if you fall out of PSE you lose that benefit on all qualifying payments.

*The NMW is due to increase from £11.44 to £12.21 in April 2025.

Kernowshep

@dasherman said:

For example:

13.50 – 11.44 x 37 = 57.72

I think you did that calculation with £13.00 not £13.50.
(13.50-11.44)x37=76.22

olb81

I am at RM and my wage is 497.90 for 35 hours.

I also have 2 allowances, RRIS and Del Supplement. It says to ignore those above.

NMW is 12.71

Does this mean that 497.90divide by 35 = 14.22 is my hourly rate

14.22 minus 12.71 = 1.51

1.51 x 35 = 53.05

So can I ask for 53.05 in AVC to be paid and it be on the left side.of the payslip therefore reducing NI payments,?

What if i paid 55 would it mean I lose all of it or get 53 relief for NI and the other 2 Go on the right side of payslip? Or would.the whole 55 go on the right?

Thanks for any help.

olb81

Any answers please thank you