Salary sacrifice?

[Fred Bloggs]

I am a Director of my own Ltd co and recieve a salary of £10k. My company makes pension contributions for me and therefore pays no NI or Corp tax on those contributions.

I have thought that maybe I would be better off having a salary sacrifice and having the sacrificed salary paid into the pension pot. This seems to save 2 x NI, Corp tax, Income tax AND gets a tax top up from Mr Brown/Darling as well.

Reading the HMRC document below, however, it appears to refer to "Employees" rather than "Directors" and any salary sacrifice cannot reduce remuneration below the minimum wage. Therefore, is salary sacrifice something I cannot do as a director?

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf

[NickNick]

Not being an expert on this I would firstly say speak to an accountant. My 2p is that you are being paid as an employee of the Ltd Co and your status as director shouldn't come into it, but like I said before, speak to an acct.

NN

[Archangel]

I am a Director of my own Ltd co and recieve a salary of £10k. My company makes pension contributions for me and therefore pays no NI or Corp tax on those contributions.

I have thought that maybe I would be better off having a salary sacrifice and having the sacrificed salary paid into the pension pot. This seems to save 2 x NI, Corp tax, Income tax AND gets a tax top up from Mr Brown/Darling as well.

Reading the HMRC document below, however, it appears to refer to "Employees" rather than "Directors" and any salary sacrifice cannot reduce remuneration below the minimum wage. Therefore, is salary sacrifice something I cannot do as a director?

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf

You should speak to a FA, but if I remember correctly the company can make any contribution it likes to a directors pension regardless of salary.

So you could pay yourself a salary of 10k and put 20k into the pension
or 5k and 5k
or anyK and anyK

[Archangel]

Not being an expert on this I would firstly say speak to an accountant. My 2p is that you are being paid as an employee of the Ltd Co and your status as director shouldn't come into it, but like I said before, speak to an acct.

NN

A director is not necessarily an employee (unless he has a contract of employment, which is not advisable in "one man bands") he is an office holder.

A director is exempt from the minimum wage regulations for example.

[Fred Bloggs]

Thanks for your thoughts. Broadly the same as my thinking. Ofcourse, I'll talk to an adviser next.

[glashIFA@Paramount]

[QUOTE=Fred Bloggs;466207]I am a Director of my own Ltd co and recieve a salary of £10k. My company makes pension contributions for me and therefore pays no NI or Corp tax on those contributions.

I have thought that maybe I would be better off having a salary sacrifice and having the sacrificed salary paid into the pension pot. This seems to save 2 x NI, Corp tax, Income tax AND gets a tax top up from Mr Brown/Darling as well.

Reading the HMRC document below, however, it appears to refer to "Employees" rather than "Directors" and any salary sacrifice cannot reduce remuneration below the minimum wage. Therefore, is salary sacrifice something I cannot do as a director?

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf[/QUOTE

Rememeber that a part of the salary is genuinely being sacrificed so any transactions based on an amount of salary may be affected such as mortgage borrowing, contribution based state benefits such as state pension and incapacity benefit, working tax credit, child tax credit, income protection benefits etc. Just a thought.