Salary Sacrifice = more take home pay?

[Cranmer]

I am interested in salary sacrifice to pay more into my pension pot. In some of the examples, it looks like by doing this many people could increase their take home pay. Why is this not more widely known about?

I am 52 and not looking to remortgage soon. I am thinking this is a no-brainer for me.

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Well it didn't work for me. I just increased my pension contribution and I was worse off by the exact amount I increased it by. So much for it being tax efficient.

Did you increase your contributions, or ask your employer for salary exchange (salary sacrifice)?

Hoping a pensions expert will be along soon!!

It reduces the amount of employees NI that you pay so you should be better off if as long as your earnings threshold isn't affected.

Just increased contributions but is that not the same thing? X

Oops, ignore the X - was texting my mum at the same time! 😂

Well salary sacrifice reduces the amount of taxes and national insurance that you pay, but it does not actually result in a higher take-home pay unless you’re very much sitting on the margins of tax brackets potentially.

For example, I am part of a very generous pension scheme, and I salary sacrifice close to 10% of my pay and my employer much is it by nearly double of that, and I also salary sacrifice for The organisations Nursery, all of which reduces the amount of taxes I pay for sure, but it also obviously reduces the amount of take-home I get. If I were not to sacrifice anything from my pension and if I were not to be a member of the organisation to Nursery , then I would lose the tax advantages for sure, but yes, according to the calculators I would have a higher take-home pay.

So I’m not entirely sure what you’re asking here, but if you are looking for salary sacrifice to directly increase the actual amount you take home. This is quite unlikely to happen. It will simply mean that you are being more tax efficient and saving money in the long run.

Please do ignore the typos. I am using the dictation feature on my devices because my right hand is currently injured and I cannot physically type words and I don’t think voice recognition software does particularly well with my accent.

Where is your pension contribution currently coming from?

If you pay more into your pension, you will see a drop in salary BUT if it is paid as salary sacrifice, the drop will be lower.