Salary sacrifice to be taxed

[SomethingInTheAirToday]

https://x.com/politlcsuk/status/1986914552093745592?s=46

not only are my generation not going to have a state pension or private healthcare, but we also can’t save into our own pensions because we need to fund the current generation.

this makes me so angry

It's still more than 3.5 years left of this horror 😡

I am not misunderstanding anything. The reduction in the benefit of salary sacrifice will impact both employers and employees. I haven’t said otherwise.

You described it as a win win - but I'm not convinced it will actually net the Treasury as much as they think it will, because a lot of employers will just say okay no problem we can't afford to have X employees any more, some have to go.

I agree it doesn't make a huge difference to employees other than the faff of doing a tax return for higher rate tax payers (which carries an admin burden for HMRC). But employers already took a NIC increase last year, another one is not going to help the job market.

I have to disagree. DH earns far more in the private sector than I do in the public sector. His employer matches his contributions up to a certain level which means he is receives the same monetary contribution as I do, has a larger take home salary now and will get the same pension as I will. Obviously, if you invest 3%, you won't.

You have misunderstood. I meant that the use of salary sacrifice was a win win for employers and employees, not its reduction.

It's not going to help inflation either - the biggest hit will be to retail, the same as last year budget, they will most surely pass on the extra cost to consumers.
And the job market is dead already, it's going to be really bad next few years.

That’s one example. The statutory minimum for employer contributions is 3%. Many do not offer more than that. The average across all sectors is 4.8% for men and 4.6% for women. If private sector defined contribution pensions were so good, public sector employees would have no problem in changing to them…

Well, that's quite a leap isn't it?

I was merely using it as an example of the fact many schemes are not sal sac. Loads of others are not, the majority in fact. Yours probably isn't.

But if you can't handle the truth, that's not my problem.

It won't have any impact on your tax return, because you don't report NI on your tax return.

But it is what it is. Always winners and losers in life. You could drive yourself insane by comparing decade on decade of how much better or worse off each generation has it. The state pension is a topic which needs to be addressed, however unpalatable it is going to be. I think possibly the younger generation are going to have to prepare themselves for the demise of the NHS too, or at least know that the government are going to have to park any sentimentality for the NHS and make some very difficult decisions, even if to partially privatise.

I don't think anyone is having their tax increased, are they?

Well I never said that everyone’s pension was set up salary sacrifice. It was said that most people don’t opt into salary sacrifice. I pointed out that if your employer runs a salary sacrifice pension scheme, that’s what you get if you want a pension. There isn’t a choice as to whether you opt for salary sacrifice or not.

It was you that made the leap! It’s also really strange that you are so against salary sacrifice pensions. Millions of people are benefiting from them and they will help to ensure that they are not so reliant on the state in the longer term.

This thread is really weird.

It's nothing to do with tax though. It's NI.

It doesn't affect the majority of workplace pensions, it doesn't affect SIPPS at all.

I do wonder whether how much she thinks she will save has been properly worked out. I'm not sure anyone in govt really understands pensions. I remember taking to Yvette Cooper about pensions years ago, I think she was shadow W&P secretary or something, and she didn't have a clue what I was talking about, and it was quite basic!

Any Income over £237/wk or £367 for a couple means you’re above the threshold for pension credit

So it’s highly unlikely if you pay even a small amount in you’ll get pension credit. Especially as employers since 2018 must now pay into your pension

There is 100% definitely a choice of opting into sal sac, 100%.

There has to be, that's the law. So, employers who run sal sac have to run non sal sac schemes as well. And salary sacrifice is a change of employee employment terms, which they have to be able to enter into willingly.

I have run sal sac schemes and had the odd person opt out (there are some circs where it could make you worse off, but that's quite technical, and some people don't like it because they like their whole salary to show on their payslip if they're about to apply for a mortgage, for example). And people on min wage cannot be on sal sac, they have to be on a standard scheme, because it's illegal to take an employees salary below min wage.

But, as I said, it's quite technical and few people seem to understand what it is (and assume it just means any pension where the contribution is taken from salary - which it doesn't).

Don’t like high taxes? Dont vote Labour.

I'm not "against" them! I have introduced them at several employers, hence I actually know what they ARE.

It's on my list to look into at my current employer but as the vast majority of our staff are on min wage, there would not be the employer saving to justify it (and if this change happens it definitely won't be worth it).

Neither my current nor my previous two employers did them, by the way. Previous was public sector, not FS pension, and one before was an international bank.

So many people will just put the bare minimum into their pension to stay under £237pm week threshold.

This just means I’ll overpay on my mortgage and abandon any extra pension salary sacrifice.

Double post, iPhones are shit.

This stings. I salary sacrifice a lot because I had almost zero pension provision until my mid-thirties and I am trying to make up for lost time in the few high earning years my career will likely afford me (ie my 40s).

No doubt I’ll be hammered with an income tax rise too, can’t wait. Love this government. My favourite.

And then we’ll still get taxed on our pensions.

So it’s double taxation, tax on salary and then tax on pensions with no salary sacrifice savings.

Fucking Labour.

It's not really a gotcha.

Many people can't change career because they wouldn't be able to afford the student loan. Many nurses train early just like other students, before they have commitments.

That’s exactly what it is.

Ugh. Fucking Labour..

Yet low paid workers can have some of their their rent paid so the difference regarding property owners is irrelevant here

A full time min wage worker earns over £22k and many now can work from home so travel costs have reduced remarkably in recent years

A pensioner can no longer work and has to live £12k. Their costs to support their living are higher than a younger healthy person.

There really is little point in comparing the financial needs of two completely different demographics