Pension contributions from gov't
Discussion
CaptainSlow said:
Except if you're on a salary sacrifice scheme where full tax relief is already achieved and you don't need to make a claim in your tax return.
eta
I think you'll find a clue here;eta
Z064life said:
Hi,
...if I invest in my (company) pension, the government automatically contributes 40%. Is this true?
...if I invest in my (company) pension, the government automatically contributes 40%. Is this true?
JulianPH said:
CaptainSlow said:
Except if you're on a salary sacrifice scheme where full tax relief is already achieved and you don't need to make a claim in your tax return.
eta
I think you'll find a clue here;eta
Z064life said:
Hi,
...if I invest in my (company) pension, the government automatically contributes 40%. Is this true?
...if I invest in my (company) pension, the government automatically contributes 40%. Is this true?
JulianPH said:
I am tired of explaining this now!
The AND is perfectly correct.
They have exchanged £600 of net income by placing £800 of net income into a pension where it receives basic rate tax relief at source (£200) within the pension and the balance of the higher rate (another £200) outside the pension via their tax return.
As I have already said this additional £200 is not in addition to the £400 tax relief, it is part of it.
So the £600 of net income has been exchanged for £1,000 in a pension AND £200 of cash as per the calculation above (and in my post above).
Haha! I finally got thereThe AND is perfectly correct.
They have exchanged £600 of net income by placing £800 of net income into a pension where it receives basic rate tax relief at source (£200) within the pension and the balance of the higher rate (another £200) outside the pension via their tax return.
As I have already said this additional £200 is not in addition to the £400 tax relief, it is part of it.
So the £600 of net income has been exchanged for £1,000 in a pension AND £200 of cash as per the calculation above (and in my post above).
Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?NickCQ said:
Haha! I finally got there
Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?
Correct.Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?eta
Make sure you're company is conducting salary sacrifice, any company over ~50 employees worth its salt would have moved over. If so you don't need to make a claim on your tax return.
I’m keeping up with this even though I’ve never had higher rate relief nor am I ever likely to have any.
As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
Jockman said:
I’m keeping up with this even though I’ve never had higher rate relief nor am I ever likely to have any.
As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
Employers pay Class 1 NI (13.8%) on salary but not employer's pension contributions, by switching between the two companies are avoiding a large amount of tax. This is a potential target for Phil.As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
CaptainSlow said:
Jockman said:
I’m keeping up with this even though I’ve never had higher rate relief nor am I ever likely to have any.
As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
Employers pay Class 1 NI (13.8%) on salary but not employer's pension contributions, by switching between the two companies are avoiding a large amount of tax. This is a potential target for Phil.As for future budgets, salary sacrifice is always being looked at but I was under the impression that this was not in the area of pensions.
Anyway, here’s hoping for an increase in the LTA !!!
Jockman said:
Absolutely. I just recall reading not so long ago that HMRC were starting to wise up to salary sacrifice schemes but were loathe to interfere in those that were orientated towards pensions. Yet.
I've never really understood why HMRC tolerates salary sacrifice. It's blatant NI avoidance.
NickCQ said:
JulianPH said:
I am tired of explaining this now!
The AND is perfectly correct.
They have exchanged £600 of net income by placing £800 of net income into a pension where it receives basic rate tax relief at source (£200) within the pension and the balance of the higher rate (another £200) outside the pension via their tax return.
As I have already said this additional £200 is not in addition to the £400 tax relief, it is part of it.
So the £600 of net income has been exchanged for £1,000 in a pension AND £200 of cash as per the calculation above (and in my post above).
Haha! I finally got thereThe AND is perfectly correct.
They have exchanged £600 of net income by placing £800 of net income into a pension where it receives basic rate tax relief at source (£200) within the pension and the balance of the higher rate (another £200) outside the pension via their tax return.
As I have already said this additional £200 is not in addition to the £400 tax relief, it is part of it.
So the £600 of net income has been exchanged for £1,000 in a pension AND £200 of cash as per the calculation above (and in my post above).
Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?PurpleMoonlight said:
I've never really understood why HMRC tolerates salary sacrifice. It's blatant NI avoidance.
To stop salary sacrifice on pension contributions, the Government would have to introduce NI on employer contributions to pensions which, like income tax, gets really messy as it is not clear how to determine the employer "contribution" to DB pensions.
CaptainSlow said:
NickCQ said:
Haha! I finally got there
Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?
Correct.Divert £1,000 of gross income to pension
Tax bill goes down by £200 (relief at source)
Net income goes down by £800
In tax return, receive £200 rebate to get to £600 total change in net income
£600 of net income has been exchanged for £1,000 in pension, £800 reduction in PAYE income and £200 rebate.
?eta
Make sure you're company is conducting salary sacrifice, any company over ~50 employees worth its salt would have moved over. If so you don't need to make a claim on your tax return.
JulianPH said:
Jockman said:
I’m keeping up with this even though I’ve never had higher rate relief nor am I ever likely to have any.
That's only because you earn too much!Just started looking at pools. Might need to pick your brains.
Now, where’s that link to your project.....
Jockman said:
JulianPH said:
Jockman said:
I’m keeping up with this even though I’ve never had higher rate relief nor am I ever likely to have any.
That's only because you earn too much!Just started looking at pools. Might need to pick your brains.
Now, where’s that link to your project.....
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