Increasing Pension Contributions

[winjim]

I think you've got that wrong, I'm pretty sure NI is calculated on you're Gross earnings so paid on your contributions.
I know it's Tax efficient.
Feel free to check and let us know.

Ha. I think you're right. I take back my earlier comment, of course it's calculated on gross earnings, anything else would be daft.

 

[Arrowfoot]

NI has always been on gross pay.

 

[fossyant]

NI has always been on gross pay.

It is. Pension, on the other hand influences your 'taxable pay'.

 

[Electric_Andy]

I understood it as Jowwy did i.e. the pension comes out at source so if you pay more into it, your monthly gross amount will drop hence you'll pay less tax and NI. I'm sure Martin Lewis can clarify

 

[Arrowfoot]

I understood it as Jowwy did i.e. the pension comes out at source so if you pay more into it, your monthly gross amount will drop hence you'll pay less tax and NI. I'm sure Martin Lewis can clarify

NI must be deducted by the employer before taxes and pension from day 1.

Edit : This is incorrect, its minus salary sacrifices but includes all allowances.

 

[glasgowcyclist]

It is different if you are using a Smart pension contribution. This method reduces the NI payments for both the employer and employee.

 

[jowwy]

NI must be deducted by the employer before taxes and pension from day 1.

Its salary sacrifice…therefore reducing my gross pay, therefore paying less tax and NI………


Do you pay NI on pension contributions salary sacrifice?

The amount you sacrifice on your salary isn't subject to income tax or NI contributions. This saves you a bit extra, since standard pension tax relief only repays income tax and doesn't include NI.

 

[midlife]

Reducing your annual salary via salary sacrifice isn't for everyone, reduces your chances of getting a mortgage and other things.

 

[jowwy]

Reducing your annual salary via salary sacrifice isn't for everyone, reduces your chances of getting a mortgage and other things.

not if you all ready got one and youve received a 10k+ payrise in the past 12mths………..

 

[Arrowfoot]

Its salary sacrifice…therefore reducing my gross pay, therefore paying less tax and NI………


Do you pay NI on pension contributions salary sacrifice?

The amount you sacrifice on your salary isn't subject to income tax or NI contributions. This saves you a bit extra, since standard pension tax relief only repays income tax and doesn't include NI.

Its one of the more misunderstood part of how salaries are treated. Google it.

If you do salary sacrifice, simple calculation of your latest payslip will tell you if it is gross or minus salary sacrifice.

I suspect it was designed from day 1 to prevent employers using "structuring" to reduce their share. Lower salary but higher allowances etc. So it is gross and takes away any shennigans.

Edit: NI does not include include salary sacrifice. Got t wrong earlier.

 

[Supersuperleeds]

So no one is increasing their contribution to their pension then - to offset the rise in NI........

I'm thinking of doing it, though I was thinking of chucking more in before the NI rise.

 

[Supersuperleeds]

I think you've got that wrong, I'm pretty sure NI is calculated on you're Gross earnings so paid on your contributions.
I know it's Tax efficient.
Feel free to check and let us know.

Salary sacrifice means you give up some of your salary and your employer puts more into your pension pot. You and the employer both save NI on the sacrificed amount. There is no income tax saving.

 

[Supersuperleeds]

Its one of the more misunderstood part of how salaries are treated. Google it.

If you do salary sacrifice, simple calculation of your latest payslip will tell you if it is gross or minus salary sacrifice.

I suspect it was designed from day 1 to prevent employers using "structuring" to reduce their share. Lower salary but higher allowances etc. So it is gross and takes away any shennigans.

@jowwy is correct, you save NI on the sacrificed amount.

 

[jowwy]

Its one of the more misunderstood part of how salaries are treated. Google it.

If you do salary sacrifice, simple calculation of your latest payslip will tell you if it is gross or minus salary sacrifice.

I suspect it was designed from day 1 to prevent employers using "structuring" to reduce their share. Lower salary but higher allowances etc. So it is gross and takes away any shennigans.

Its minus the salary sacrifice…..i been paying into it for 17yrs, so i know what im paying

i even put a google quoye above in my last post….

 

[jowwy]

Salary sacrifice means you give up some of your salary and your employer puts more into your pension pot. You and the employer both save NI on the sacrificed amount. There is no income tax saving.

It saves you income tax too……….same as salary sacrifice on the c2w scheme