Potential capping of Salary Sacrifice (speculation)?

Grumpy_chap

hugheskevi said:

Grumpy_chap said:

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. 

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

(£10,000 - £2000) * 8% = £640

Why "-£2k"?

Is that the basic rate tax deducted first and the NI only on the remainder?

SVaz

The ‘proposed’ £2k allowance before the NI kicks in.  

Grumpy_chap

SVaz said:

The ‘proposed’ £2k allowance before the NI kicks in.  

Aaah - I missed that bit of detail from the speculation:

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.

However, from a practical perspective, as there is no real difference between any employer pension contribution and SS employer pension contribution, one might reasonably assume that the £2k cap on SS contributions would apply to all employer contributions so therefore including auto-enrolment contributions.

For any individual in a position to make £10k SS contributions, they may well be above the point at which standard employer contributions have already used all of the £2k allowance.

Andy_L

hugheskevi said:

westv said:

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. 

The DWP Employer Survey 2024 (slide 33) found that 42% of employers offered employee salary sacrifice. Almost all large private sector employers offer salary sacrifice, so it is likely that the minority of employers offer salary sacrifice, but that the majority of private sector employees have access to salary sacrifice.

Reports over the last few years have suggested some employers were moving away from salary sacrifice and instead just implementing non-contributory schemes, eg, 8% employer contribution and nil employee for automatic enrolment requirements, to simplify payroll. The rumoured changes might accelerate that.

Isn't that slide saying that its 42% of "Employers who offer flexibilities to their employees in terms of how pension-related contributions can be received" offer sal sac. Not that 42% of all  employers offer it?

With the previous slide establishing that its 11% of all employers (24% in large employers) who offer flexibilities in pension-related contributions. So its 42% of 11% who offer it or about 5%

RogerPensionGuy

I though/think salary sacrifice can be used on many items, I thought it was 10 different items. 

I also think not every employee or employed person can actually enjoy this benefit. 

Very unfair for people who can't enjoy salary sacrifice. 

Apart from the obvious rewards of salery sacrifice, it can reduce a persons gross pay on the books and help mitigate children allowance and plenty other stuff. 

So if not available for all, maybe it will be seen as easy low hanging fruit and tinkering with it could be called making a level field and also the broadest shoulders saying that's so popular. 

I think some items like propping up the problem EV Car makers allows up to a 4 year deal. 

If I was enjoying a nice cheap EV Car funded by taxpayers, I would probably aquire my brand new EV in the next two weeks as I can only guess the 4 year deal will stand hopefully. 

If they change EV salery sacrifice and/or the motobility scheme, we will see some very cheap EVs for people that pay full price, well discounted EV prices are often 20 or 30% off the RRP, hopefully this will become more for private buyers.

A link below for information. 

***

What Is Salary Sacrifice? Are You Missing Out? | Penfold https://share.google/Anj4GSGub1XxXVQ5s

noclaf

If this change does happen, is it likely to require a 'phase in' period due to all the admin that would no doubt be required to adjust payroll etc?
All of the firms (Fin. services) I have worked for in the last 15ish years offer sal sac for DC pensions so whilst it might be a small proportion overall would expect quite a few large instituions will be impacted. 

I am (rather selfishly) wondering if should shovel in even more into my pension in anticipation but that's not always a sensible idea given this change has not been confirmed yet but can understand why they might go there.

RNV

Yes, pension contributions is undoubtedly the main stream of SS.   

However, many more areas are offered by my employer [global; UK presence was ~5k personnel not long ago but started reducing already (more and more projects are done out of UAE) and I can see an avalanche of redundancies after the budget]. 

FWIW, I have been "buying" extra 2 weeks of holidays via SS over the lass few years.... So would that 2k limit apply to all SS volume or just pension contribution....What a mess  payroll system will be !

Cobbler_tone

I buy shares, holidays and pension via SS

hugheskevi

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.

However, from a practical perspective, as there is no real difference between any employer pension contribution and SS employer pension contribution, one might reasonably assume that the £2k cap on SS contributions would apply to all employer contributions so therefore including auto-enrolment contributions.

For any individual in a position to make £10k SS contributions, they may well be above the point at which standard employer contributions have already used all of the £2k allowance.

No practical difference, but a huge leap to assume that a similar limit would be applied to all employer contributions.

With some public service schemes having employer contributions of 20-30% that would be extra NI on all public sector workers. And with a decent chunk of that being past service pension contributions, you would need to come up with a way of valuing the employer contribution to individual pension accrual.

Whereas limiting it to actual salary sacrifice arrangements avoids hitting 'genuine' employer contributions. Although that does lead to the odd situation of levying NI on lower levels of employer contributions as they are a salary sacrifice arrangement, whilst higher levels go untaxed.

westv

RogerPensionGuy said:

I though/think salary sacrifice can be used on many items, I thought it was 10 different items. 

I also think not every employee or employed person can actually enjoy this benefit. 

Very unfair for people who can't enjoy salary sacrifice. 

Apart from the obvious rewards of salery sacrifice, it can reduce a persons gross pay on the books and help mitigate children allowance and plenty other stuff. 

So if not available for all, maybe it will be seen as easy low hanging fruit and tinkering with it could be called making a level field and also the broadest shoulders saying that's so popular. 

I think some items like propping up the problem EV Car makers allows up to a 4 year deal. 

If I was enjoying a nice cheap EV Car funded by taxpayers, I would probably aquire my brand new EV in the next two weeks as I can only guess the 4 year deal will stand hopefully. 

If they change EV salery sacrifice and/or the motobility scheme, we will see some very cheap EVs for people that pay full price, well discounted EV prices are often 20 or 30% off the RRP, hopefully this will become more for private buyers.

A link below for information. 

***

What Is Salary Sacrifice? Are You Missing Out? | Penfold https://share.google/Anj4GSGub1XxXVQ5s

I was never a believer in the "I don't have it, so neither should you" school of thought.