Workplace pension question

Thepainter2025

Can anyone answer a question please?

If payment contributions by an employee are made via Salary Sacrifice (effectively appearing as payments made by employer), do these type of contributions benefit from tax relief?

Thanks!

FIREDreamer

Thepainter2025 said:

Can anyone answer a question please?

If payment contributions by an employee are made via Salary Sacrifice (effectively appearing as payments made by employer), do these type of contributions benefit from tax relief?

Thanks!

No, as you havent paid tax on them in the first place.

However had you taken the salary and made the pension payments yourself the effect is the same so you have “sort of” received tax relief albeit indirectly.

You have also paid less NI by going down the salary sacrifice route.

Marcon

FIREDreamer said:

Thepainter2025 said:

Can anyone answer a question please?

If payment contributions by an employee are made via Salary Sacrifice (effectively appearing as payments made by employer), do these type of contributions benefit from tax relief?

Thanks!

No, as you havent paid tax on them in the first place.

However had you taken the salary and made the pension payments yourself the effect is the same so you have “sort of” received tax relief albeit indirectly.

You have also paid less NI by going down the salary sacrifice route.

Yes, for the employer - corporation tax relief in the same way salaries can be charged as a business expense. 

Employer payments are always made gross to a pension scheme, so there's no tax relief available to the employee.

As Fire says, you've effectively had tax relief (plus both you and the employer have an NI saving)  because you've never received this amount as salary.

LITRG

Hi, there is tax relief on employer contributions to a pension in so far as they do not usually count as a benefit in kind on the employee: https://www.litrg.org.uk/working/employment/taxable-employment-income/non-taxable-payments-and-benefits-employment
Hope that helps.