Salary Sacrifice for employment whilst receiving public sector pension

WeekendDry27

Hi,

I am hoping you can help.

I am trying to understand the tax implications to me, involving salary sacrifice.

My situation is I receive a public service pension and have been re-employed on a part-time contract by the same organisation. My part-time salary is £33,000, tax code BR, I contribute £175 a month into another public sector pension. With my pension pay, I have roughly £10,000 which I have to contribute 40% tax, managed through my pension tax code. My question is when applying for an EV vehicle salary sacrifice, which is based on my current employment salary and tax code, and it estimates the reduction in NI, tax, pension on these amounts. The combination of my current pension contribution and potential gross salary sacrifice will be roughly £10,000 annually, bringing my combined salary and pension below the 40% threshold. My pension carries the 40% burden, but the salary sacrifice does not recognise this in the calculations. So, my question is; will the tax contribution from my pension reduce for further benefits, if I proceed with a salary sacrifice?

Salary                  £33,000                              Annual pension contribution    £2100

Pension              £27,000                               Salary Sacrifice Annual              £8500

Total                     £60,000                             Total                                                   £10,600

eskbanker

Yes, the principle of salary sacrifice entails a reduction in taxable income, so the overall amount of tax payable decreases accordingly - if this isn't picked up automatically by HMRC, you can either advise them of your new income (via online personal tax account) or wait until it comes out in the wash after the end of the tax year.

Albermarle

Be aware that if you let the process happen automatically, you will probably not see a rebate for this tax year until late 2026.