Potential capping of Salary Sacrifice (speculation)?

Grumpy_chap

Dazed_and_C0nfused said:

If it is true then it's yet another thing to add to the complexities of running payroll 😢

Which many payroll software systems won't be ready to administer as it is a functionality that was not envisaged when the system developed.

Plus the complexity of individuals with more than one employment in the year - job changers, individuals with two (or more) jobs.

Plus an annual threshold for a payment that is determined on a per payroll basis.

artyboy said:

Basically a suggestion that the NI benefits to Salary Sacrifice pension contributions could be limited to a maximum of £2000 per year, with NI (employer and employee) becoming payable above that level.

BlackKnightMonty said:

This is a target on private pensions only; it has no impact on civil servants!

So, if the restriction on NI benefits applies to all pension contributions, it would affect both DC and DB schemes and provides yet more complexity in the case of DB schemes.
It might be another reason for Medical Consultants (and others at similar salary levels) to work less / not take extra hours.  
All could be very counter-productive to the drive to increase productivity.

BlackKnightMonty

westv said:

BlackKnightMonty said:

westv said:

I would say the clickbait headline is unlikely.

Even when published in the Financial Times?

https://on.ft.com/482NXevReeves plans £2bn Budget raid on UK retirement savings 

Effectively. It's a pay site.

Not click bait then.

SVaz

Stupid people are saying that it will stop them paying into pensions.  🙄
If my Maths is correct,   someone sal sac-ing £10k would pay £640 in NI if it came to pass.
They would still save £3360 in tax. 

doodling

Hi,

It is completely unclear whether this would be a tax on employer pension contributions in general or whether it would be a tax on the concept of salary sacrifice.

Salary sacrifice is just a special case of employer contributions.

Could I get round this potential tax by changing employment to an employer which pays a larger employer pension contribution but doesn't run a salary sacrifice scheme?  What if I changed employment to an employer within the same owning group?  What if I was promoted to a role with a different pension arrangement within the same employer?

In order for this tax to work, it would have to apply to all employer contributions and then you have the fun of how that works for defined benefit arrangements....

Andy_L

westv said:

Andy_L said:

BlackKnightMonty said:

At a time when people are making inadequate pension provisions, and when the government is seeking greater investment into the UK (and what do pension funds invest in); it is extraordinary the government are proposing to do this. This will reduce the amount being saved into private pensions. The lack of joined up thinking is incredible. This is a target on private pensions only; it has no impact on civil servants!

or the vast majority of private sector workers who don't have access to SalSac schemes

Where does it say that?

It doesn't need to. It's implicit that a cap on sal sac wont impact anyone who doesn't have access to it

Cobbler_tone

The only positive is that it has taken since last July to get here. At least we should all be prepared and haven’t seen anything rumoured which comes as a huge surprise.
Broaden those shoulders. 

artyboy

I suppose the small mercy is that I'm done paying into pensions. So at least she can only stuff me in one direction (and hasn't she just...)

Albermarle

At one point some years ago, no employers operated a salsac scheme for pension contributions.
I am not sure how or when it started, but presumably some bright spark realised it was a loophole that could be used to save on NI.
Gradually more and more employers used it/exploited the loophole (although many still do not ) , and every year it costs the Treasury more, a few Billions at least in total.
So an obvious target, and an almost instant benefit to the Treasury coffers, if a suitable but not too complicated mechanism can be found to restrict it.

westv

Andy_L said:

westv said:

Andy_L said:

BlackKnightMonty said:

At a time when people are making inadequate pension provisions, and when the government is seeking greater investment into the UK (and what do pension funds invest in); it is extraordinary the government are proposing to do this. This will reduce the amount being saved into private pensions. The lack of joined up thinking is incredible. This is a target on private pensions only; it has no impact on civil servants!

or the vast majority of private sector workers who don't have access to SalSac schemes

Where does it say that?

It doesn't need to. It's implicit that a cap on sal sac wont impact anyone who doesn't have access to it

You claimed the vast majority of private sector workers don't have sal sac. 

Grumpy_chap

SVaz said:

Stupid people are saying that it will stop them paying into pensions.  🙄
If my Maths is correct,   someone sal sac-ing £10k would pay £640 in NI if it came to pass.
They would still save £3360 in tax. 

Assuming the individual is SS-ing from the portion of salary above £967 per week (£50,284 per year), then that is at an employee's NI rate of 2%, so £200 NI to pay.

If the individual is SS-ing from the portion of salary between NMW and £967 per week, then the employee's NI rate of 8%, so £800 NI to pay.

I don't see where the £640 calculation is from.

The bigger hit is the employer-NI on the amount at the rate of 15% so £1.5k NI to pay. 

If the change that has been mentioned simply applied to all employer pension contributions, that would be a big increase to the taxation on employment.  It will be difficult to distinguish between standard employer pension contributions and SS employer pension contributions.