Salary Sacrifice and NMW Limitations

LeafGreen

In the last year or 2, I have been substantially ramping up my Workplace Pension Salary Sacrifice contributions, to the point where I am almost hitting the NMW limitation based on my pensionable base salary.
But I also get some additional pay for participating in on-call rotas.  This is not pensionable, and while it has been fairly consistent for years it does vary slightly from month to month and is not guaranteed.
So my question is whether the NMW limitation is based on my base pensionable salary only, or if I can include my extra pay in that calculation.  The thinking being if I can calculate it based on my overall total earnings, I will be able to salary sacrifice a greater amount.  I'm also not sure whether the limitation applies for every month or as a total for each tax year.
Thanks!

molerat

NMW is based on pay reference period so per pay packet.

Pay reference periods

Pay reference periods are usually set by how often someone is paid, for example one week, one month or 10 days. A pay reference period cannot be longer than 31 days.

A worker must be paid the minimum wage, on average, for the time worked in the pay reference period.

https://www.gov.uk/national-minimum-wage/employers-and-the-minimum-wage

Cobbler_tone

It might not be pensionable at source but it is taxable earnings, so I would say you should be able to include it.
Whether your employer does is another question. Mine are all over it once you sacrifice below minimum wage.

tizerbelle

Cobbler_tone said:

Mine are all over it once you sacrifice below minimum wage.

Because if they let you sacrifice below NMW, they are the ones that HMRC will fine!

To OP, it sounds very much like you want the payroll team to make adjustments every month to the amount of salary you sacrifice depending on your other earnings in the pay period.  I am guessing this will not be a request that they will approve - you will be creating extra work for them and more risk for the company should they ever get the calculations wrong. 

Dunky62

I have had a similar issue where I get regular allowances for shiftwork and flexible working allowances, however i cannot include these in the NMW  calculation. It is all down to the 'Legislation'.  Very frustrating but employers have to stick with the Guidance from HMRC.

spaniel101

My Employer automatically places a stop on reaching down to minimum wage, and automatically moves it across to Net Pay Arrangement, as required.

It's worth an ask.

 

LeafGreen

Thankyou all for quick replies!  I might just raise a case with my HR department anyway and see what they say, more in hope than expectation though!

zagfles

The other thing you need to account for is the extra hours. NMW is an hourly amount. Depending of the nature of your on-call rota they might need to pay min wage for the on-call time (I think this depends on the restrictions put on you, there's stuff on the ACAS site about this IIRC).

Also any time actually called out and working is definitely working hours. So to determine if you're within NMW you need to divide total pay by total hours worked, which may include on-call time and will include time when you're called out and working. 

Cobbler_tone

Unless you are juggling around the 40% tax band, can't you let the year play out and up your contributions before the end of the tax year?

QrizB

Cobbler_tone said:

Unless you are juggling around the 40% tax band, can't you let the year play out and up your contributions before the end of the tax year?

OP can't SalSac to less than NMW, so no that won't help them.

OP can make personal RAS contributions (and can ignore the SalSac NMW floor when doing so) but those wouldn't benefit from the NI savings you get with SalSac.

LeafGreen

Just to update on this (from last month).  I did raise a case with my company payroll team.  They said that I can select the contribution I desire in the flexible benefits system, and if I am eligible then the system will accept it.  I had a play around with the numbers (without submitting) and it looks like it will let me go all the way to 99% of my base salary - at 100% it gives the message "You cannot contribute more than 100% of your pensionable pay."

Having done rather a lot of on-call this year, plus a fair bit of savings interest that has been credited this tax year, I am pushing towards becoming a higher rate tax payer for the first time.  I think if I massively ramp up my pension contributions just for the next 2 months then I can avoid that from happening.

I don't think I've got anything to lose - I can avoid paying any 40% tax and keep the £1000 PSA - so think I will go for it and see what happens.