How much can you Salary sacrifice?
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happyandcontented
Posts: 2,768 Forumite
I work as a Director part time in a Ltd Co. How much of my salary can I sacrifice into a pension?
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You cannot sal sac yourself below national minimum wage so you need to leave yourself about £1200 pcmI’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
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happyandcontented wrote: »I work as a Director part time in a Ltd Co. How much of my salary can I sacrifice into a pension?
Depends if the NMW applies, which isn't always the case with directors and other office holders. See https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm05140
If there are no NMW considerations, you can sacrifice 100% of pay (maximum tax relievable contribution in any tax year is normally £40,000).0 -
happyandcontented wrote: »The Directorship is a second job. I earn more than NMW in my other job. Does that still apply?
Irrelevant - you need to look at your directorship (see previous post) on a standalone basis.0 -
I'm thinking of setting up a company. The directors would draw no salary but would benefit from pension contributions. Anything wrong with this?Free the dunston one next time too.0
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There is a link below to HMRC overview pages. I think you cannot take your salary below the minimum wage.
I was involved in a company 3/4 years ago where a directors bonus was ‘sacrificed’ and they utilised carry back to put over £40k in so assume it is down to the normal pension contributions criteria. Hopefully somewhere in the links on the HMRC pages it will confirm this.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim427750 -
I think that the previous link would be nearer the mark. I am not an employee per se, but a Director with voting rights.0
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happyandcontented wrote: »I think that the previous link would be nearer the mark. I am not an employee per se, but a Director with voting rights.
So you receive a director's fee as an office holder(?).Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
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