Potential capping of Salary Sacrifice (speculation)?

hugheskevi

Andy_L said:

hugheskevi said:

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%

Yes, looking at it again, yours is correct interpretation. Although with no weighting and a large proportion of employers answering 'Don't know' there probably isn't a great deal that can be concluded from this survey expect that it suggests that a lot of employers do not offer salary sacrifice.

Unfortunately, it is the only survey I know that has asked about salary sacrifice. It seems to be an area that has very little survey data available.

BlackKnightMonty

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

The FT suggests the Employer NIC which is not paid, could also be paid.

so £10,000 * 15% =£1,500.00 from the Employer.

FIREDreamer

NoMore said:

FIREDreamer said:

westv said:

eastcorkram 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. 

I'd imagine that's true. I had it in my final job. I was there for 14 years. Anyone joining about two years after me, doesn't have the opportunity to use sal sac. 

Why would a company stop using sal sac and pay more NI?

Salary sacrifice only impacts employee NI I believe, so no gain to the employer from salary sacrifice as they are paying their own, real, employer contributions regardless.

A different ball game if employer and employee contributions have to pay NI though.

the employer saves employer NI as well when sal sac used

Grumpy_chap said:

FIREDreamer said:

Salary sacrifice only impacts employee NI I believe, so no gain to the employer from salary sacrifice as they are paying their own, real, employer contributions regardless.

A different ball game if employer and employee contributions have to pay NI though.

Your belief is incorrect in the case of SS pension contributions.

The employee reduces their salary by, say £10k.
The employer increases the employer pension contributions by £10k.
The employee saves income tax and employee's NI on the £10k.
The employer saves employer's NI on the £10k.

Fair enough, senior moment!

FIREDreamer

westv said:

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

You mean Socialism? 🤣🤣🤣

Shimrod

BlackKnightMonty said:

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

The FT suggests the Employer NIC which is not paid, could also be paid.

so £10,000 * 15% =£1,500.00 from the Employer.

Very expensive if, like me you work through an umbrella company. I have a day rate out of which I have to pay employer NI, employee NI, apprenticeship levy as well as income tax. I currently salary sacrifice into my pension which comes out of the day rate before all the deductions.

 A limit on, or removal of salary sacrifice is going to leave me paying a minimum of 43% on income (15% employer NI, 8% employee NI and 20% income tax).

Cobbler_tone

Shimrod said:

BlackKnightMonty said:

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

The FT suggests the Employer NIC which is not paid, could also be paid.

so £10,000 * 15% =£1,500.00 from the Employer.

Very expensive if, like me you work through an umbrella company. I have a day rate out of which I have to pay employer NI, employee NI, apprenticeship levy as well as income tax. I currently salary sacrifice into my pension which comes out of the day rate before all the deductions.

 A limit on, or removal of salary sacrifice is going to leave me paying a minimum of 43% on income (15% employer NI, 8% employee NI and 20% income tax).

TFLS, ISAs, income tax hikes, EV charges, SS restrictions…it’s all just noise that will disappear in a couple of weeks. Alternatively, you reap what you sow.

BlackKnightMonty

Shimrod said:

BlackKnightMonty said:

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

The FT suggests the Employer NIC which is not paid, could also be paid.

so £10,000 * 15% =£1,500.00 from the Employer.

Very expensive if, like me you work through an umbrella company. I have a day rate out of which I have to pay employer NI, employee NI, apprenticeship levy as well as income tax. I currently salary sacrifice into my pension which comes out of the day rate before all the deductions.

 A limit on, or removal of salary sacrifice is going to leave me paying a minimum of 43% on income (15% employer NI, 8% employee NI and 20% income tax).

My full sympathy. I have been in your umbrella shoes and you get absolutely rinsed for tax.

Employer and Employee NIC, Income Tax, and Apprenticeship levy.

In total you pay MORE tax than an employee, have zero employment rights, and most people hate you because they think you are an overpaid tax dodging contractor.

QrizB

BlackKnightMonty said:

In total you pay MORE tax than an employee, have zero employment rights, and most people hate you because they think you are an overpaid tax dodging contractor.

OTOH your day rate is at least double what staff get, so you'll just have to dry you eyes with all the extra £20s.

BlackKnightMonty

QrizB said:

BlackKnightMonty said:

In total you pay MORE tax than an employee, have zero employment rights, and most people hate you because they think you are an overpaid tax dodging contractor.

OTOH your day rate is at least double what staff get, so you'll just have to dry you eyes with all the extra £20s.

Thanks for making my point.

QrizB

BlackKnightMonty said:

QrizB said:

BlackKnightMonty said:

In total you pay MORE tax than an employee, have zero employment rights, and most people hate you because they think you are an overpaid tax dodging contractor.

OTOH your day rate is at least double what staff get, so you'll just have to dry you eyes with all the extra £20s.

Thanks for making my point.

That's no trouble, it's what us hadworking and underappreciated permanent staff do for overpaid tax-dodging contractors every day of the week