Can someone please explain what the 2K threshold and NI contributions change means

artyboy

BlackKnightMonty said:

MeteredOut said:

BlackKnightMonty said:

Albermarle said:

doodling said:

Hi,

zagfles said:

Companies have a long time to react to this. Wonder how many will start operating "reverse sal sac" schemes? Offer jobs paying eg £30k with £30k employer pension conts, with the option to trade pension conts for extra salary 

Im expecting HMRC (and maybe government through legislation) to be playing "whack a mole" with that and other, similar approaches for several years.

The exact definition of salary sacrifice previously hasn't really mattered since it didn't really affect how much tax was paid - it does now and the creative skills of those at the edge of the tax system will no doubt be put to full use.

I can see some employers, after consultation with staff, paying pay rises as increases in pension contributions for the next few years - that wouldn't be salary sacrifice either providing it wasn't done on an individual basis.

The fundamental problem is that the government has decided to tax based on how something is done, not on what is done - that approach will always create loopholes and unfairness.

The current system itself is also unfair,
Only about a third of private sector employees and 10% of public sector employees are actually in salary sacrifice schemes. Plus of course the self employed and minimum wage workers do not benefit.
So everybody else is paying their full NI , whilst those lucky enough to be in salsac schemes do not .
According to the budget data, 74% of basic rate taxpayers in salsac schemes will not be affected by the change.
So at a rough guess, about 12% of employees overall will be affected. Mainly those with the broadest shoulders I think.
On the other hand those with the broadest shoulders can still fill their boots with 40% tax relief on pension contributions, so could have been a lot worse.

Those with the broadest shoulders are tired from having to carry so many people.

I'd suggest it is those who are mainly looking out for themselves "are tired from having to carry so many people".

Those of us who appreciate that salary sacrifice is a very generous tax saving mechanism can accept paying a little more to support those that need it.

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

The problem with going down that route is that there are always people that think they are much worse off than you, tax wise.

Not me, last year, but certainly in the past 

BlackKnightMonty

artyboy said:

BlackKnightMonty said:

MeteredOut said:

BlackKnightMonty said:

Albermarle said:

doodling said:

Hi,

zagfles said:

Companies have a long time to react to this. Wonder how many will start operating "reverse sal sac" schemes? Offer jobs paying eg £30k with £30k employer pension conts, with the option to trade pension conts for extra salary 

Im expecting HMRC (and maybe government through legislation) to be playing "whack a mole" with that and other, similar approaches for several years.

The exact definition of salary sacrifice previously hasn't really mattered since it didn't really affect how much tax was paid - it does now and the creative skills of those at the edge of the tax system will no doubt be put to full use.

I can see some employers, after consultation with staff, paying pay rises as increases in pension contributions for the next few years - that wouldn't be salary sacrifice either providing it wasn't done on an individual basis.

The fundamental problem is that the government has decided to tax based on how something is done, not on what is done - that approach will always create loopholes and unfairness.

The current system itself is also unfair,
Only about a third of private sector employees and 10% of public sector employees are actually in salary sacrifice schemes. Plus of course the self employed and minimum wage workers do not benefit.
So everybody else is paying their full NI , whilst those lucky enough to be in salsac schemes do not .
According to the budget data, 74% of basic rate taxpayers in salsac schemes will not be affected by the change.
So at a rough guess, about 12% of employees overall will be affected. Mainly those with the broadest shoulders I think.
On the other hand those with the broadest shoulders can still fill their boots with 40% tax relief on pension contributions, so could have been a lot worse.

Those with the broadest shoulders are tired from having to carry so many people.

I'd suggest it is those who are mainly looking out for themselves "are tired from having to carry so many people".

Those of us who appreciate that salary sacrifice is a very generous tax saving mechanism can accept paying a little more to support those that need it.

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

The problem with going down that route is that there are always people that think they are much worse off than you, tax wise.

Not me, last year, but certainly in the past 

I am just fed up with paying so much tax yet everything is broken and everyone hates you.

QrizB

BlackKnightMonty said:

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

I seem to have misplaced my tiny violin.

Albermarle

Cobbler_tone said:

The general consensus in the workplace over the budget today. “Phew, we got away with it”

The budget was hyped up by the media and the Govt and I think some people were expecting some kind of Armageddon scenario.
It could be there will be a general sigh of relief and a rush to the Xmas shops .

artyboy

BlackKnightMonty said:

artyboy said:

BlackKnightMonty said:

MeteredOut said:

BlackKnightMonty said:

Albermarle said:

doodling said:

Hi,

zagfles said:

Companies have a long time to react to this. Wonder how many will start operating "reverse sal sac" schemes? Offer jobs paying eg £30k with £30k employer pension conts, with the option to trade pension conts for extra salary 

Im expecting HMRC (and maybe government through legislation) to be playing "whack a mole" with that and other, similar approaches for several years.

The exact definition of salary sacrifice previously hasn't really mattered since it didn't really affect how much tax was paid - it does now and the creative skills of those at the edge of the tax system will no doubt be put to full use.

I can see some employers, after consultation with staff, paying pay rises as increases in pension contributions for the next few years - that wouldn't be salary sacrifice either providing it wasn't done on an individual basis.

The fundamental problem is that the government has decided to tax based on how something is done, not on what is done - that approach will always create loopholes and unfairness.

The current system itself is also unfair,
Only about a third of private sector employees and 10% of public sector employees are actually in salary sacrifice schemes. Plus of course the self employed and minimum wage workers do not benefit.
So everybody else is paying their full NI , whilst those lucky enough to be in salsac schemes do not .
According to the budget data, 74% of basic rate taxpayers in salsac schemes will not be affected by the change.
So at a rough guess, about 12% of employees overall will be affected. Mainly those with the broadest shoulders I think.
On the other hand those with the broadest shoulders can still fill their boots with 40% tax relief on pension contributions, so could have been a lot worse.

Those with the broadest shoulders are tired from having to carry so many people.

I'd suggest it is those who are mainly looking out for themselves "are tired from having to carry so many people".

Those of us who appreciate that salary sacrifice is a very generous tax saving mechanism can accept paying a little more to support those that need it.

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

The problem with going down that route is that there are always people that think they are much worse off than you, tax wise.

Not me, last year, but certainly in the past 

I am just fed up with paying so much tax yet everything is broken and everyone hates you.

QrizB said:

BlackKnightMonty said:

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

I seem to have misplaced my tiny violin.

Perfect timing 

BlackKnightMonty

QrizB said:

BlackKnightMonty said:

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

I seem to have misplaced my tiny violin.

It’s no wonder UK emigration is the highest in a century.

Cobbler_tone

BlackKnightMonty said:

artyboy said:

BlackKnightMonty said:

MeteredOut said:

BlackKnightMonty said:

Albermarle said:

doodling said:

Hi,

zagfles said:

Companies have a long time to react to this. Wonder how many will start operating "reverse sal sac" schemes? Offer jobs paying eg £30k with £30k employer pension conts, with the option to trade pension conts for extra salary 

Im expecting HMRC (and maybe government through legislation) to be playing "whack a mole" with that and other, similar approaches for several years.

The exact definition of salary sacrifice previously hasn't really mattered since it didn't really affect how much tax was paid - it does now and the creative skills of those at the edge of the tax system will no doubt be put to full use.

I can see some employers, after consultation with staff, paying pay rises as increases in pension contributions for the next few years - that wouldn't be salary sacrifice either providing it wasn't done on an individual basis.

The fundamental problem is that the government has decided to tax based on how something is done, not on what is done - that approach will always create loopholes and unfairness.

The current system itself is also unfair,
Only about a third of private sector employees and 10% of public sector employees are actually in salary sacrifice schemes. Plus of course the self employed and minimum wage workers do not benefit.
So everybody else is paying their full NI , whilst those lucky enough to be in salsac schemes do not .
According to the budget data, 74% of basic rate taxpayers in salsac schemes will not be affected by the change.
So at a rough guess, about 12% of employees overall will be affected. Mainly those with the broadest shoulders I think.
On the other hand those with the broadest shoulders can still fill their boots with 40% tax relief on pension contributions, so could have been a lot worse.

Those with the broadest shoulders are tired from having to carry so many people.

I'd suggest it is those who are mainly looking out for themselves "are tired from having to carry so many people".

Those of us who appreciate that salary sacrifice is a very generous tax saving mechanism can accept paying a little more to support those that need it.

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

The problem with going down that route is that there are always people that think they are much worse off than you, tax wise.

Not me, last year, but certainly in the past 

I am just fed up with paying so much tax yet everything is broken and everyone hates you.

Thankfully with the amount of time spent on here you didn’t have to work too hard for it.
It’s the “I work hard” brigade I feel sorry for. 

JamTomorrow

Oh well.  Pleasantly surprised to get 3 more years of around £80k/year into my pension at an effective tax/NI saving at around 52%.  Always a chance it will be reversed in an election year as well.

I will fill annual pension contribution as quickly as possible each month through salary sacrifing down to minimum wage from May (I avoid April as this is bonus payment month).  This approach ensures I get some NI benefit at 8%, rather than the 2% I would get if I filled my annual pension contribution on a straight line basis. 

This quirk arises because NI is calculated on period earnings rather than annual earnings.  Worth a few quid if you can be bothered phasing your pension contributions in this way and have savings to draw on when you are taking home minimum wage.

BlackKnightMonty

Cobbler_tone said:

BlackKnightMonty said:

artyboy said:

BlackKnightMonty said:

MeteredOut said:

BlackKnightMonty said:

Albermarle said:

doodling said:

Hi,

zagfles said:

Companies have a long time to react to this. Wonder how many will start operating "reverse sal sac" schemes? Offer jobs paying eg £30k with £30k employer pension conts, with the option to trade pension conts for extra salary 

Im expecting HMRC (and maybe government through legislation) to be playing "whack a mole" with that and other, similar approaches for several years.

The exact definition of salary sacrifice previously hasn't really mattered since it didn't really affect how much tax was paid - it does now and the creative skills of those at the edge of the tax system will no doubt be put to full use.

I can see some employers, after consultation with staff, paying pay rises as increases in pension contributions for the next few years - that wouldn't be salary sacrifice either providing it wasn't done on an individual basis.

The fundamental problem is that the government has decided to tax based on how something is done, not on what is done - that approach will always create loopholes and unfairness.

The current system itself is also unfair,
Only about a third of private sector employees and 10% of public sector employees are actually in salary sacrifice schemes. Plus of course the self employed and minimum wage workers do not benefit.
So everybody else is paying their full NI , whilst those lucky enough to be in salsac schemes do not .
According to the budget data, 74% of basic rate taxpayers in salsac schemes will not be affected by the change.
So at a rough guess, about 12% of employees overall will be affected. Mainly those with the broadest shoulders I think.
On the other hand those with the broadest shoulders can still fill their boots with 40% tax relief on pension contributions, so could have been a lot worse.

Those with the broadest shoulders are tired from having to carry so many people.

I'd suggest it is those who are mainly looking out for themselves "are tired from having to carry so many people".

Those of us who appreciate that salary sacrifice is a very generous tax saving mechanism can accept paying a little more to support those that need it.

I paid over £50k in income tax and NIC last year, shoulders ache so much. I am deeply resentful in paying a penny more.

The problem with going down that route is that there are always people that think they are much worse off than you, tax wise.

Not me, last year, but certainly in the past 

I am just fed up with paying so much tax yet everything is broken and everyone hates you.

Thankfully with the amount of time spent on here you didn’t have to work too hard for it.
It’s the “I work hard” brigade I feel sorry for. 

Touché 

thankfully my work is quite cerebral.

Grumpy_chap

MeteredOut said:

I agree those working through UCs will want to find a way to avoid paying the EE NI.

OR, it will just mean that inside-IR35 contracting via UC's will simply cease to be a viable option. 
It is not a good option now, and the only real opportunity to make it work was SS pension. 
If it get's less attractive then the individuals will simply not be available and willing to take contract roles on an inside-IR35 basis.
It may be that individuals simply say they will go full-in staff and all that entails or definite outside-IR35 contract via Ltd Co, but not inside-IR35.  There seems to be no reason to accept the same taxation and restrictions as PAYE but without any of the certainty, career-path, training, annual leave, sickness pay, healthcare, etc...