Hi,
I am a higher-rate tax payer pay 10% of my salary into a company pension scheme each month. For that obviously, for every 58p I put into the scheme, I get 20p basic tax relief, 20p 'cash back' (either through adjusted tax code or re-claim) and lose 2p in NI.
My company wants to switch all employees over to salary sacrifice and is promoting the savings and benefits (employer NI savings will not be passed on to us). However, to me it appears a poor option for higher rate tax payers.
By joining, the 20p 'cash back' goes straight into my pension along with the 2p NI. However, if I continue to take it as cash back, I can put it into the pot manually myself and claim income tax relief against it (and the cycle repeats to a smaller amount). Effectively, I can get an extra 10.5p tax back this way by foregoing the original 2p salary sacrifice benefit.
I cannot find any discussions online about this and I can't be the only one to have spotted this, which leads me to believe I've overlooked something important. Can anyone put me straight?
- Home
-
Tax News
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice and Methods
- Professionals in Practice & Industry
- General
- TaxationWeb
-
Tax Articles
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings and Investments, Pensions and Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice & Methods
- Professionals in Practice & Industry
- General
- Tax Tips
-
Tax Forum
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations and Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practices & Methods
- Professionals in Practice & Industry
- General
- Tax Jobs
- Get in Touch