Salary Sacrifice and SME Income wage Calculator

Hogwarzt1

Hello,

I just trying to clarify when using the take home wage calculator and salary sacrifice, do I need to subtract the percentage of my pension contribution prior to entering the Annual salary into the calculator? I'm trying to avoid paying the higher tax rate (40%) by contributing more to my pension if that makes sense?

Marcon

Hogwarzt1 said:

Hello,

I just trying to clarify when using the take home wage calculator and salary sacrifice, do I need to subtract the percentage of my pension contribution prior to entering the Annual salary into the calculator? I'm trying to avoid paying the higher tax rate (40%) by contributing more to my pension if that makes sense?

You enter the actual gross salary you are being paid, and (unless you are making pension contributions on top of those being made by salary sacrifice), put zero for pension contributions.

Cobbler_tone

You need to start with your gross salary. Add on any other taxable income...e.g. healthcare, company car etc
Then take off any other salary sacrifice, such as share schemes.
Then you have your gross taxable pay and can apply you pension % to bring it below the 40% bracket, should you so wish.

Hogwarzt1

Thank you for helping here. I've used the calculator both ways. I don't have any taxable extras. Just salary sacrifice. The calculator doesn't match my payslip take home monies. I do contribute 10% to my pension. If I subtract that and use that as my annual then the calculator comes within £5 of my payslip. maybe i'm using the wrong calculator? Is there a salary sacrifice calculator or doesn't it matter??

Hogwarzt1

okay so its as I thought:

Simple Salary Sacrifice

An agreed amount of your salary is given up before calculating your tax and take home pay. You are effectively earning a lower salary and therefore both you and your employer will pay less National Insurance (NI).

The amount that you, the employee, save in National Insurance (NI) will be reflected as an increase in your take home pay.

This works out correct, by subtracting 10% pension contribution off my annual salary and then using that figure in the calculator.

thank you all