Salary Sacrifice
Discussion
I'm paying into the company pension scheme of my employer. It's not much as I've got all my finances sorted with pensions I was paying into over the last 30 years but they match my payments so silly not to.
I've been asked if I want to do this is 2016 as salary sacrifice.
I have no need for loans etc so the '"lower" income is not an issue.
So is there any reason not to do this via salary sacrifice?
Thanks
Gary
I've been asked if I want to do this is 2016 as salary sacrifice.
I have no need for loans etc so the '"lower" income is not an issue.
So is there any reason not to do this via salary sacrifice?
Thanks
Gary
Eric Mc said:
There is a downside in that your P60 will show the lower salary - which can hurt you if you want to borrow or use your salary as a bargaining chip for a pay rise or new employer.
My P60 shows a lower amount because of SS, but my gross salary on my monthly payslip still displays the 'correct' amount, so may be OK for mortgage etc?Eric Mc said:
There is a downside in that your P60 will show the lower salary - which can hurt you if you want to borrow or use your salary as a bargaining chip for a pay rise or new employer.
As I said in my OP Eric, I have no need for loans and certainly not bargaining chips.Am I correct to assume that's really the only downside and thus if a "lower" salary is of no importance then salary sacrifice is the way to go?
garyhun said:
As I said in my OP Eric, I have no need for loans and certainly not bargaining chips.
Am I correct to assume that's really the only downside and thus if a "lower" salary is of no importance then salary sacrifice is the way to go?
Yep- mines salary sacrifice - just saves a bit of NIAm I correct to assume that's really the only downside and thus if a "lower" salary is of no importance then salary sacrifice is the way to go?
https://www.gov.uk/guidance/salary-sacrifice-and-t...
garyhun said:
Just reading up and I guess another possible downside is that if you leave the company before being in the scheme for 2 years you may lose the contributions.
Is that a company by company decision?
Think so yes- but that would probably be the same even if it wasn't done by salary sacrifice Is that a company by company decision?
garyhun said:
Eric Mc said:
There is a downside in that your P60 will show the lower salary - which can hurt you if you want to borrow or use your salary as a bargaining chip for a pay rise or new employer.
As I said in my OP Eric, I have no need for loans and certainly not bargaining chips.Am I correct to assume that's really the only downside and thus if a "lower" salary is of no importance then salary sacrifice is the way to go?
The government is reviewing the plethora of salary sacrifice schemes currently in place so this scheme may be one that might not be around for much longer.
garyhun said:
Eric Mc said:
The government is reviewing the plethora of salary sacrifice schemes currently in place so this scheme may be one that might not be around for much longer.
What a surprise! 
Seriously though if you're a higher rate tax payer it's good as it should mean that you don't have to claim back additional tax via a return. You haven't mentioned it but as others said it means the company saves NI so you may be able to negotiate so that some of this goes into your pension.
Also, if you are earning at high enough salary where some restrictions kick in - such as having to pay back child benefit - or you start losing your personal tax allowances, salary sacrifice reduces your headline salary and you will not lose so much in the way of benefits and allowances.
I think it is the latter fact which is causing the government to realise that it isn't just NI that they are losing out on and this is what is making them reconsider their previous rather generous approach to salary sacrifice schemes.
I think it is the latter fact which is causing the government to realise that it isn't just NI that they are losing out on and this is what is making them reconsider their previous rather generous approach to salary sacrifice schemes.
Eric Mc said:
Also, if you are earning at high enough salary where some restrictions kick in - such as having to pay back child benefit - or you start losing your personal tax allowances, salary sacrifice reduces your headline salary and you will not lose so much in the way of benefits and allowances.
I think it is the latter fact which is causing the government to realise that it isn't just NI that they are losing out on and this is what is making them reconsider their previous rather generous approach to salary sacrifice schemes.
The law of unintended consequences at work.I think it is the latter fact which is causing the government to realise that it isn't just NI that they are losing out on and this is what is making them reconsider their previous rather generous approach to salary sacrifice schemes.
brickwall said:
I reckon at the next budget George will significantly pare back salary sacrifice, and possibly 40% relief too; it'll be replaced by a big increase in the limit on the new 'lifetime ISA'. Over time - the 'lifetime ISA' wrapper will be the new pension vehicle, replacing tax relief on contributions.
And possibly a reduction in the AIA....make hay as they say...Gassing Station | Finance | Top of Page | What's New | My Stuff