Can Sal Sacrifice be paid into private pension

Jaguar_Skills · 14 September 2018 at 11:23AM

Hi all,

The director of our company (since we are small and don't give advice on tax/payroll) has asked if I can get advice from my accountant in relation to whether salary sacrifice has to be paid into company pension or whether it can be re calibrated into a personal pension. The email I sent my account who does my self assessment is below, but I thought I would fish for some answers here:

I have a query regarding salary sacrifice.

Basically the end of this month is our bonus period. I want to use £15,000 of my bonus to put into my pension via salary sacrifice.

I have discussed this with my director and the two points we need clarity on are as follows:

1) Can my director pay directly into my personal pension rather than company pension with no additional tax implications even if I am not a director of the company currently?

My director does not want to be seen to be giving tax advice himself and therefore needs a qualified professional to confirm the position?

2) My director is happy to pass on 100% of the N.I. saving to me and therefore if 1) is possible on the basis of a £15,000 payment, what figure would I need to be paid to me directly as salary?

If you need any more info for this bit, please let me know.

Any advice appreciated as ever.

Dox · 14 September 2018 at 11:27AM

Simple answer is yes.

Jaguar_Skills · 14 September 2018 at 12:11PM

Dox wrote: »

Simple answer is yes.

Thanks Dox.

Is there a simple way of working out the figure that needs to be paid to me directly then?

HappyHarry · 14 September 2018 at 12:14PM

Employer NIC is 13.8%

So, £15,000 + 13.8% = £17,070

The payment will need to come directly form your employer to your pension company.

Make sure you tell your pension company that this is an employer contribution.

lisyloo · 14 September 2018 at 12:15PM

Whoever does the payroll ought to be aware of how employers NI works out

But it would be 15,000 plus 13.8% empoyers NI
So
15000*1.138=£17070

Dox · 14 September 2018 at 12:33PM

Jaguar_Skills wrote: »

Thanks Dox.

Is there a simple way of working out the figure that needs to be paid to me directly then?

If the NI saving is also paid to your pension by your employer, there are no tax/NI implications for you, so might be easiest to do that?

lisyloo · 14 September 2018 at 12:37PM

what figure would I need to be paid to me directly as salary?

salary + bonus MINUS £15000
£17070 goes to pension

Jaguar_Skills · 14 September 2018 at 2:19PM

Thank you everyone. I have been reading up on something which I wasn't particularly aware of before. The tapered annual allowance.

My income is £150k and I also have a rental flat which I get some income from although I may put this in my gf's name as she is not working currently as she looks aafter our son.

We aren't going to marry yet as she doesn't want to just to just do registry but I have also heard that you can put it 99% to 1% in her name as well? I wonder whether that would help the above.

Kynthia · 14 September 2018 at 4:09PM

Jaguar_Skills wrote: »

Thank you everyone. I have been reading up on something which I wasn't particularly aware of before. The tapered annual allowance.

My income is £150k and I also have a rental flat which I get some income from although I may put this in my gf's name as she is not working currently as she looks aafter our son.

We aren't going to marry yet as she doesn't want to just to just do registry but I have also heard that you can put it 99% to 1% in her name as well? I wonder whether that would help the above.

See an accountant. There's issues with transfer of ownership with a mortgage or not and potential stamp duty and CGT implications, beneficial ownership, income tax, future CGT, tapering, LTA, earnings limit and what counts as relevant earnings. Presumably you've sorted wills and nominated each other to receive each other's pension in the event of your death? Is your girlfriend getting any NI credits towards a state pension?

Snapdragon · 14 September 2018 at 5:53PM

Dox wrote: »

Simple answer is yes.

Is this correct?

Sorry if I'm swimming against the tide here, but I'm reading all the responses saying yes this is fine and wondering if everyone responding really read the detail rather than post title and the reference to salary sacrifice.

The OP stated "I want to use £15,000 of my bonus to put into my pension via salary sacrifice. "

Aren't salary sacrifice and bonus sacrifice via salary sacrifice rules very different?

Doesn't HMRC state that in the case of a BONUS you can't salary sacrifice any guaranteed bonus or any bonus where you know in advance how much the bonus is?

At my company, I can sacrifice a discretionary bonus they pay annually because it is not guaranteed and I have to do this at a point when I don't know the value I am agreeing to sacrifice, in other words how much I would have got, if I didn't opt for it to go in the pension directly. I can't however sacrifice a different type of bonus paid on a set date where I know its value in advance.

Reading the OPs original statement that they want to sacrifice £15,000 of their bonus, NOT their salary. I'm suspicious the same rules might apply?

As far as I can tell what others have said would be true if they were talking about their salary I'm just not so convinced it's true for bonus sacrifice.

HappyHarry · 14 September 2018 at 7:26PM

Snapdragon wrote: »

Is this correct?

Sorry if I'm swimming against the tide here, but I'm reading all the responses saying yes this is fine and wondering if everyone responding really read the detail rather than post title and the reference to salary sacrifice.

The OP stated "I want to use £15,000 of my bonus to put into my pension via salary sacrifice. "

Aren't salary sacrifice and bonus sacrifice via salary sacrifice rules very different?

Doesn't HMRC state that in the case of a BONUS you can't salary sacrifice any guaranteed bonus or any bonus where you know in advance how much the bonus is?

At my company, I can sacrifice a discretionary bonus they pay annually because it is not guaranteed and I have to do this at a point when I don't know the value I am agreeing to sacrifice, in other words how much I would have got, if I didn't opt for it to go in the pension directly. I can't however sacrifice a different type of bonus paid on a set date where I know its value in advance.

Reading the OPs original statement that they want to sacrifice £15,000 of their bonus, NOT their salary. I'm suspicious the same rules might apply?

As far as I can tell what others have said would be true if they were talking about their salary I'm just not so convinced it's true for bonus sacrifice.

Are you sure? I'm not aware of any restrictions regarding bonuses with salary sacrifice. In fact, HMRC appear to use it as a legitimate example of salary sacrifice here: https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

Can Sal Sacrifice be paid into private pension

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