Salary sacrifice proposals by Labour
Discussion
The government s plan to cap the tax benefits of salary sacrifice schemes will erode trust in the savings system and strike a reckless hit on businesses and jobs, according to opposition parties and pensions experts.
In salary sacrifice schemes, staff agree to give up some of their wages in return for other benefits, typically pension contributions. This lowers their headline salary so they and their employer pay less national insurance. Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year, and the tax relief is available on the whole of that contribution. But Reeves is set to introduce a new threshold of £2,000, above which contributions will incur national insurance at the usual rates 8 per cent on salaries under £50,270 and 2 per cent on income above that. The Treasury estimates the move will raise £2bn per year. It would be the second national insurance blow to businesses after employers contribution rate was raised to 15 per cent in April and the threshold at which it is levied was lowered in a move that opponents dubbed the jobs tax
From the times
In salary sacrifice schemes, staff agree to give up some of their wages in return for other benefits, typically pension contributions. This lowers their headline salary so they and their employer pay less national insurance. Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year, and the tax relief is available on the whole of that contribution. But Reeves is set to introduce a new threshold of £2,000, above which contributions will incur national insurance at the usual rates 8 per cent on salaries under £50,270 and 2 per cent on income above that. The Treasury estimates the move will raise £2bn per year. It would be the second national insurance blow to businesses after employers contribution rate was raised to 15 per cent in April and the threshold at which it is levied was lowered in a move that opponents dubbed the jobs tax
From the times
Sheepshanks said:
Racehorse said:
Employees can currently put up to £60,000 into their salary sacrifice pension scheme per year,
Well some employees can. Not all employers operate salary sacrifice.Racehorse said:
contributions will incur national insurance at the usual rates
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
Why would hit lower earners more?Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
But yes would hit pension savings for many
Edited by Racehorse on Friday 14th November 21:42
Racehorse said:
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
Why would hit lower earners more?Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
But yes would hit pension savings for many
Edited by Racehorse on Friday 14th November 21:42
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn’t actually sound a bad idea…..
I’d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don’t think it’ll hit the pocket of the average working man much at all.
I’d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don’t think it’ll hit the pocket of the average working man much at all.
AndyAudi said:
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn t actually sound a bad idea ..
I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
The wealthy ‘working man’ you mean?I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
As I said on another thread earlier, the amount of tax a high PAYE earner is paying completes dwarfs someone on £40k. Let’s not forget that those of us using Sal Sac in a big way will be paying income tax again on that money when we retire, it’s not a complete gimme.
There needs to be some sort of carrot for people or what’s the point.
ChocolateFrog said:
The NI would hit lower earners harder would it not? Seems to go against all the hard working people BS.
Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
And a pension contribution of someone in the private sector of 5% (2k being 5% of £40k) is more than sufficient, where those in the public services need 27% state contribution, and 10% personal contribution.Unless they've worked out the 2k limit captures the majority of those under their imaginary working person salary.
AndyAudi said:
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn t actually sound a bad idea ..
I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
Your post implies that you have your own definition "wealthy", and the pay of the "average working man". I wonder what they are?I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
R.
The Leaper said:
AndyAudi said:
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn t actually sound a bad idea ..
I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
Your post implies that you have your own definition "wealthy", and the pay of the "average working man". I wonder what they are?I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
R.
“those using salary sacrifice are generally using it to put away money or obtain things that are discretionary spending”
There are still tax benefits to making pension contributions (I hope)
So we’re speaking about a % of a % impact
AndyAudi said:
I know the opposition parties have to be critical & find the worst, but ditching Salary Sacrifice doesn t actually sound a bad idea ..
I d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
people of a certain age, will think... ah fI d say it does mainly benefit the wealthy who are more likely to take advantage of it.
I really don t think it ll hit the pocket of the average working man much at all.
k this.. I may as well retire now. 768 said:
Pit Pony said:
eople of a certain age, will think... ah fk this.. I may as well retire now.
That age is about 40 the way this lot are going.k this.. I may as well retire now. Am now thinking now of phasing down to 4 then 3 days a week from 59. I'm on a retirement planning course paid for by my employer next week. Not sure if I'll learn much...
Only that I should have paid in more sooner.
CubanPete said:
And a pension contribution of someone in the private sector of 5% (2k being 5% of £40k) is more than sufficient, where those in the public services need 27% state contribution, and 10% personal contribution.
Why are you saying 5% is "more than sufficient" in the private sector?And are you comparing this with 27 + 10 = 37% in the public sector? That would be very odd.
The main reason that I sacrifice quite so much in to my pension is to avoid the ludicrous cliff edge at 100k for personal allowance loss and loss of childcare (which is a huge net difference to lose) - I would imagine there are lots of people in the same boat.
What I'd rather do is not have those cliff edges and just pay anything over 100k at 45%, which on a net basis must surely be better for all concerned?
What I'd rather do is not have those cliff edges and just pay anything over 100k at 45%, which on a net basis must surely be better for all concerned?
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