Company pension options

Cobbler_tone

It’s an area people really to struggle to get their head around.
Example, your salary is £50k, you sacrifice £10k into your pension. You pay tax and NI against £40k but your salary is still £50k (your contracted salary) for all other purposes. The same with share save schemes, holiday purchase, cycle to work etc if your company runs SS. 

My salary is £70k but I get paid NMW before tax and NI due to my SS selections. If I get made redundant it’s against the £70k.

BloomNew

QrizB said:

BloomNew said:

After reading some of the recent posts.  I'm not so sure about swapping to the Salary Sacrifice scheme. I don't want to end up with an HMRC bill but need to consider the best option for pension saving. 

?

The NI saving is free money, tax you would otherwise have paid.

Which posts in particular make you worried about an HMRC bill?

The ones mentioning the loophole.  Feels like you could end up with a repayment request from hmrc

Cobbler_tone

BloomNew said:

QrizB said:

BloomNew said:

After reading some of the recent posts.  I'm not so sure about swapping to the Salary Sacrifice scheme. I don't want to end up with an HMRC bill but need to consider the best option for pension saving. 

?

The NI saving is free money, tax you would otherwise have paid.

Which posts in particular make you worried about an HMRC bill?

The ones mentioning the loophole.  Feels like you could end up with a repayment request from hmrc

Probably misinterpreting loophole, it’s totally fine and recognised.

dunstonh

BloomNew said:

After reading some of the recent posts.  I'm not so sure about swapping to the Salary Sacrifice scheme. I don't want to end up with an HMRC bill but need to consider the best option for pension saving. 

You cannot end up with a bill.     All that was said earlier is that the growth of salary sacrifice on pensions from being a tiny hit to the treasury 25 years ago is now one of the biggest, in respect of pensions.   There has been repeated speculation (albeit along with a lot of other noise) that they have looked at stopping it in the future.    Until then, you are free to use it.

fuzzzzy

Cobbler_tone said:

It’s an area people really to struggle to get their head around.
Example, your salary is £50k, you sacrifice £10k into your pension. You pay tax and NI against £40k but your salary is still £50k (your contracted salary) for all other purposes. The same with share save schemes, holiday purchase, cycle to work etc if your company runs SS. 

My salary is £70k but I get paid NMW before tax and NI due to my SS selections. If I get made redundant it’s against the £70k.

That was also the same at my work place but I don't necessarily think that it means that is the case for all salary sacrifice schemes.

It would be prudent for anyone starting salary sacrifice to check with their own workplace how it would affect their contractual salary for all other purposes such as redundancy.

HedgehogRulez

fuzzzzy said:

Cobbler_tone said:

It’s an area people really to struggle to get their head around.
Example, your salary is £50k, you sacrifice £10k into your pension. You pay tax and NI against £40k but your salary is still £50k (your contracted salary) for all other purposes. The same with share save schemes, holiday purchase, cycle to work etc if your company runs SS. 

My salary is £70k but I get paid NMW before tax and NI due to my SS selections. If I get made redundant it’s against the £70k.

That was also the same at my work place but I don't necessarily think that it means that is the case for all salary sacrifice schemes.

It would be prudent for anyone starting salary sacrifice to check with their own workplace how it would affect their contractual salary for all other purposes such as redundancy.

Well you’d be wrong, but people like to make wild assumptions sometimes…

Cobbler_tone

HedgehogRulez said:

fuzzzzy said:

Cobbler_tone said:

It’s an area people really to struggle to get their head around.
Example, your salary is £50k, you sacrifice £10k into your pension. You pay tax and NI against £40k but your salary is still £50k (your contracted salary) for all other purposes. The same with share save schemes, holiday purchase, cycle to work etc if your company runs SS. 

My salary is £70k but I get paid NMW before tax and NI due to my SS selections. If I get made redundant it’s against the £70k.

That was also the same at my work place but I don't necessarily think that it means that is the case for all salary sacrifice schemes.

It would be prudent for anyone starting salary sacrifice to check with their own workplace how it would affect their contractual salary for all other purposes such as redundancy.

Well you’d be wrong, but people like to make wild assumptions sometimes…

I am sure there is a company or two breaking the law (or trying) in multiple areas. I can imagine the conversation. "Your redundancy pay is actually £25k and not £100k because you have been buying annual leave and paying extra into your pension." 
It's not something you'll find in most contracts though, as it's a given that your contractual salary is just that.
SS shouldn't be that difficult to grasp but you see questions time and time again about claiming tax back etc.