£2000 NI relief cap on pension salary sacrifice from April 2029 (confirmed)

BlackKnightMonty

artyboy said:

Cobbler_tone said:

artyboy said:

SnowMan said:

Salary sacrifice document 

https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029

So full employer NICs on sacrificed amounts above £2k then. But not on anything additional that the employer is 'truly' contributing themselves.

Definitely going to be some scheme closures and less generous matching in future...

Huge caveat of 3.5 years to u-turn on that one.

At some point, someone will make the argument that the lower earners will end up paying 4 times as much NI (i.e. 8%) than those 'rich bankers' that she said she wanted to target in her speech... (who will only be on the 2% rate)

Which misses the point that the person on £150k doing £60k of sal sac has already paid the full 8% NI on their way up.

HedgehogRulez

so if you had £150k taxable income you could still contribute £100k by SS (assuming you had sufficient carry forward) and enjoy full NI relief of 2% x £100k = £2k?

artyboy

BlackKnightMonty said:

artyboy said:

Cobbler_tone said:

artyboy said:

SnowMan said:

Salary sacrifice document 

https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029

So full employer NICs on sacrificed amounts above £2k then. But not on anything additional that the employer is 'truly' contributing themselves.

Definitely going to be some scheme closures and less generous matching in future...

Huge caveat of 3.5 years to u-turn on that one.

At some point, someone will make the argument that the lower earners will end up paying 4 times as much NI (i.e. 8%) than those 'rich bankers' that she said she wanted to target in her speech... (who will only be on the 2% rate)

Which misses the point that the person on £150k doing £60k of sal sac has already paid the full 8% NI on their way up.

I'm not disagreeing with that point, but if you're going to try and justify it on the basis that you're closing a loophole for the rich, those numbers aren't going to pass the average voter's sniff test. I suspect that a relative minority really understand salsac in the first place, so it's an easy win to say that the poor will pay 4 times more than the rich...

artyboy

HedgehogRulez said:

so if you had £150k taxable income you could still contribute £100k by SS (assuming you had sufficient carry forward) and enjoy full NI relief of 2% x £100k = £2k?

Been there, done that. Lots of carry forward likely to get used (by those 'moderately rich' bankers, not hit by tapering) in the next few years.

BlackKnightMonty

HedgehogRulez said:

so if you had £150k taxable income you could still contribute £100k by SS (assuming you had sufficient carry forward) and enjoy full NI relief of 2% x £100k = £2k?

I think the limit is £60k. I’m not sure what happens if you drop from a high to low rate tax payer.

£60k -2k *2%= £1,160 in employee national insurance.

af1963

An incentive for companies to offer to increase the fixed employer contributions.  (Loses the flexibility of salary sacrifice, but keeps the NI exemption.)

Anything to stop people within the same company having different employment contracts with different employer contribution rates? 

Alice gets 3% employer contribution, 5% basic employee contribution
Bob gets 3% employer contribution, 5% basic employee contribution, and salary sacrifices 10% extra
Carol gets 13% employer contribution and 5% employee contribution

roadweary

I'm hoping a calculator gets created at some point.  Currently I max out my annual pension contributions via salary sacrifice and my employer contributes what ever percentage and additionally they put in what they saved in their NI contributions.

I have no idea monetarily what the new arrangement will mean.

Without my pension contribution I would exceed 100k gross income (varies but the true gross is probably 120k ish).  Will salary sacrifice still count and reduce my taxable income (other than NI) as it did before?

artyboy

af1963 said:

An incentive for companies to offer to increase the fixed employer contributions.  (Loses the flexibility of salary sacrifice, but keeps the NI exemption.)

Anything to stop people within the same company having different employment contracts with different employer contribution rates? 

Alice gets 3% employer contribution, 5% basic employee contribution
Bob gets 3% employer contribution, 5% basic employee contribution, and salary sacrifices 10% extra
Carol gets 13% employer contribution and 5% employee contribution

A previous employer offered different matching levels based on the employee's age. Not sure if that's still legal, but it certainly happened at one point.

I suppose there's nothing to prevent employers offering increased employer contributions in lieu of annual pay rises going forward. For anyone getting close to the next income tax threshold, that could be especially helpful...

jimjames

HedgehogRulez said:

so if you had £150k taxable income you could still contribute £100k by SS (assuming you had sufficient carry forward) and enjoy full NI relief of 2% x £100k = £2k?

Not as I read it. It's not £2k NI saving but £2k total that can be salary sacrificed

https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029/changes-to-salary-sacrifice-for-pensions-from-april-2029

westv

2029. It might not even happen