Potential capping of Salary Sacrifice (speculation)?

BlackKnightMonty

QrizB said:

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

…. LOL …… LOL

Grumpy_chap

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.

You can always get a 9 to 5 and follow a future as a loved and valued team member, accrue your workplace pension, annual leave, sickness pay, parental leave, healthcare...

QrizB said:

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

You can always leave and go contracting, maybe do a couple of days or so each week and relax on all the other time you won't need to work to make your money the way you do now...

BlackKnightMonty

Grumpy_chap 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.

You can always get a 9 to 5 and follow a future as a loved and valued team member, accrue your workplace pension, annual leave, sickness pay, parental leave, healthcare...

QrizB said:

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

That’s what I’ve done. After a nice long stint earning delicious day rates.

michaels

I struggle with the whole 'identifying part of pay as salary sacrifice' - surely an employer and employee can negotiate pretty much any split of pay and pension in the employment contract (subject only to minimum wage).  EG Employer offers 80k salary, 10k pension contribution and facility to salary sacrifice 30k or 50k salary and 40k pension - chose whichever contract you prefer.

Personally the only way I could see this working is to declare that any pension contributions over the statutory minimum (3%/5%?) are not liable for NI relief (neither employers nor employees). 

What of the 5-9% employee and 25% odd employer government DB pension contributions?  Well as we are all in this together the employer can simply pay the NI bill on this and we can tell all the public sector workers they are effectively getting a large pay rise to cover the increased pension tax charge [after all it is revenue neutral ]

BlackKnightMonty

michaels said:

I struggle with the whole 'identifying part of pay as salary sacrifice' - surely an employer and employee can negotiate pretty much any split of pay and pension in the employment contract (subject only to minimum wage).  EG Employer offers 80k salary, 10k pension contribution and facility to salary sacrifice 30k or 50k salary and 40k pension - chose whichever contract you prefer.

Personally the only way I could see this working is to declare that any pension contributions over the statutory minimum (3%/5%?) are not liable for NI relief (neither employers nor employees). 

What of the 5-9% employee and 25% odd employer government DB pension contributions?  Well as we are all in this together the employer can simply pay the NI bill on this and we can tell all the public sector workers they are effectively getting a large pay rise to cover the increased pension tax charge [after all it is revenue neutral ]

There aren’t many who want to squirrel like that and live like a hermit today.

Especially when it is such a gamble when your money goes into a pension.

Will they raise the minimum age you can access your money?

Will they change the tax free lump sum?

Will they tax your pot, or even just take it away?

si2winit

Personally I would expect a similar system to Ireland, where salsac has a limit depending on age, easier for employers to manage, and it addresses the short term problem of the great baby boomer wealth transition (which is underway) which in turn leads to a lot of people sacrificing the max they can for the tax breaks for their salaries.  

michaels

BlackKnightMonty said:

michaels said:

I struggle with the whole 'identifying part of pay as salary sacrifice' - surely an employer and employee can negotiate pretty much any split of pay and pension in the employment contract (subject only to minimum wage).  EG Employer offers 80k salary, 10k pension contribution and facility to salary sacrifice 30k or 50k salary and 40k pension - chose whichever contract you prefer.

Personally the only way I could see this working is to declare that any pension contributions over the statutory minimum (3%/5%?) are not liable for NI relief (neither employers nor employees). 

What of the 5-9% employee and 25% odd employer government DB pension contributions?  Well as we are all in this together the employer can simply pay the NI bill on this and we can tell all the public sector workers they are effectively getting a large pay rise to cover the increased pension tax charge [after all it is revenue neutral ]

There aren’t many who want to squirrel like that and live like a hermit today.

Especially when it is such a gamble when your money goes into a pension.

Will they raise the minimum age you can access your money?

Will they change the tax free lump sum?

Will they tax your pot, or even just take it away?

The point is though, how is a different contract where a higher pension amount is contractual any different to a salary sacrifice arrangement?

michaels

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!

I'm afraid I don't buy this 'people aren't saving enough for their pensions'.  As far as the govt is concerned, then if people are saving so that they won't qualify for benefits/state tops ups in retirement then they are saving enough, and salary sacrifice is almost certainly most relevant to those who will be earning considerably more in retirement for whom there is no fiscal need to persuade to make higher contributions.

IE If Tarquin on 100k is already making provision to have a pension of 50k pa then that is plenty and we don't need to encourage him to save any more.  Much better to use the cost of pension tax breaks to encourage Fred on 25k to save more into a pension so he does not only get a pension of 12k and then rely on state top ups. 

Cobbler_tone

michaels said:

I struggle with the whole 'identifying part of pay as salary sacrifice' - surely an employer and employee can negotiate pretty much any split of pay and pension in the employment contract (subject only to minimum wage).  EG Employer offers 80k salary, 10k pension contribution and facility to salary sacrifice 30k or 50k salary and 40k pension - chose whichever contract you prefer.

Personally the only way I could see this working is to declare that any pension contributions over the statutory minimum (3%/5%?) are not liable for NI relief (neither employers nor employees). 

What of the 5-9% employee and 25% odd employer government DB pension contributions?  Well as we are all in this together the employer can simply pay the NI bill on this and we can tell all the public sector workers they are effectively getting a large pay rise to cover the increased pension tax charge [after all it is revenue neutral ]

Pretty much my position but only in my final couple of years from an affordability perspective. I’m on NMW after sacrificing. As the NMW is increasing I’ll be able to sacrifice less. We’ll increase wages significantly for those who need it to sacrifice 6% into their pension. I’m into my final planned year, so hopefully damage limitation whatever happens. 

BlackKnightMonty

michaels said:

BlackKnightMonty said:

michaels said:

I struggle with the whole 'identifying part of pay as salary sacrifice' - surely an employer and employee can negotiate pretty much any split of pay and pension in the employment contract (subject only to minimum wage).  EG Employer offers 80k salary, 10k pension contribution and facility to salary sacrifice 30k or 50k salary and 40k pension - chose whichever contract you prefer.

Personally the only way I could see this working is to declare that any pension contributions over the statutory minimum (3%/5%?) are not liable for NI relief (neither employers nor employees). 

What of the 5-9% employee and 25% odd employer government DB pension contributions?  Well as we are all in this together the employer can simply pay the NI bill on this and we can tell all the public sector workers they are effectively getting a large pay rise to cover the increased pension tax charge [after all it is revenue neutral ]

There aren’t many who want to squirrel like that and live like a hermit today.

Especially when it is such a gamble when your money goes into a pension.

Will they raise the minimum age you can access your money?

Will they change the tax free lump sum?

Will they tax your pot, or even just take it away?

The point is though, how is a different contract where a higher pension amount is contractual any different to a salary sacrifice arrangement?

I don’t understand your question.