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Agency Only Offers PAYE - No Umbrella

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    #11
    Originally posted by tjccjt01 View Post
    You can pay into a private pension from net income and recover the income tax paid from your self-assessment. It's not as convenient as a salary sacrifice scheme though.
    You also cannot reclaim any NI paid on the money just income tax.

    It's why salary sacrifice is so important as it's the only reason why an umbrella is a better bet than agency payroll.

    And that was before the 2.5% NI increase that kicks off in April.
    merely at clientco for the entertainment

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      #12
      Ah eek! Thank you. Yes the ni cannot be recovered which is a fair point

      just a final twist to this question. If as a Uk perm employee you get given the chance to salary sacrifice or pay at the end of the year does it actually make a difference to you as an employee?!

      i would prefer to pay at end of year and have accountant deal with it on self assessment but is there a ni twist which I am not seeing for the employee?! The employer won’t give back their ni saving obviously I don’t think. It’s a large corporate and I don’t think they will do that

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        #13
        Originally posted by NowPermOutsideUK View Post
        Ah eek! Thank you. Yes the ni cannot be recovered which is a fair point

        just a final twist to this question. If as a Uk perm employee you get given the chance to salary sacrifice or pay at the end of the year does it actually make a difference to you as an employee?!

        i would prefer to pay at end of year and have accountant deal with it on self assessment but is there a ni twist which I am not seeing for the employee?! The employer won’t give back their ni saving obviously I don’t think. It’s a large corporate and I don’t think they will do that
        You don't get the option as an employee do you? They have to offer a pension by law so you just get signed up on a plan and make monthly contributions directly out of your wage. There aren't usually any other options are there?
        'CUK forum personality of 2011 - Winner - Yes really!!!!

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          #14
          Not true. You can elect the amount of the additional pension contribution you make as salary sacrifice as well as elect to give up your bonus to pension. That saves them the employer ni

          the alternative is to pay into a sipp and then reduce your tax via self assessment

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            #15
            Originally posted by NowPermOutsideUK View Post
            Not true. You can elect the amount of the additional pension contribution you make as salary sacrifice as well as elect to give up your bonus to pension. That saves them the employer ni

            the alternative is to pay into a sipp and then reduce your tax via self assessment
            Doesn't mean they will contribute the employer NI savings that they make. That will just go into the gross profit pot.
            merely at clientco for the entertainment

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              #16
              That is exactly my question. If the employer offers salary sacrifice but without any contribution like employer ni payment does it make a difference to the employee whether they do salary sacrifice or year end private pension contribution

              does the employee also save ni on salary sacrifice and is it meaningful amount or 1-2%? Bear in mind even after pension will still be higher tax payer

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                #17
                Originally posted by NowPermOutsideUK View Post
                That is exactly my question. If the employer offers salary sacrifice but without any contribution like employer ni payment does it make a difference to the employee whether they do salary sacrifice or year end private pension contribution

                does the employee also save ni on salary sacrifice and is it meaningful amount or 1-2%? Bear in mind even after pension will still be higher tax payer
                Yes because the employee NI side will be paid into your pension even if the agency / employer doesn't contribute the hidden employer side of things.

                Let's say it's £100,000, £10k NI, £35k income tax, £55k paid to you.

                with salary sacrifice the total will still need to add up to £100k so it becomes £40k pension, £8k NI, £22k income tax, £30k paid to you.

                merely at clientco for the entertainment

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                  #18
                  I think agencies having to run their own payroll will be something that becomes more prevalent. Many of the brolly firms now offer PEO services to facilitate this. End customers want to secure and simplify their supply chain and you only have to look at the direction of travel in The States where clients often don't allow intermediaries between the agency and the worker, forcing agencies to pay them W2.

                  Tends to be driven by the huge risk averse corporates.
                  https://uk.linkedin.com/in/andyhallett

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                    #19
                    Originally posted by NowPermOutsideUK View Post
                    Can you not pay into a salary privately and then at year end self assessment recover the tax?
                    If you pay into a pension privately then you get an automatic base rate credit.

                    So pay in 80 and your contribution becomes 100.

                    Any additional credit is knocked off your tax bill via SATR (ie you are a higher rate taxpayer).

                    Of course the amount tou can get relief is governed by the 40k limit (or 4k) etc. When breached these qill be clawed back through your SATR.

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                      #20
                      Sorry to revive an old thread but I have just been offered a contract in a similar situation where the agency is saying only PAYE is possible and they cannot salary sacrifice any pension contributions. If I decide to accept and then pay a full £40k into a SIPP "from my own pocket" I will get a minimum of 20% of this back as a tax rebate after my self assessment? How can I calculate what portion of the 40k will be returned at 40% or maybe I have misunderstood something?

                      EDIT: found an example that makes sense here: https://www.gov.uk/tax-on-your-priva...ion-tax-relief

                      Hopefully I understand correctly in that I will be due a minimum of 8k back from HMRC if I pay 40K into a SIPP and did not get any relief at source.
                      Last edited by breaktwister; 12 August 2022, 17:44.

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