Do pension contributions reduce NI liability on inside IR35 contract?

[juckky]

So I have finally had to succumb and through gritted teeth accept an inside IR35 contract. To try and minimise my PAYE tax liability I am planning on maxing out pension contributions so that I come in under the 40% tax rate, which at present means reducing my gross to about 50k. If for example the gross contact rate per year before employers NI and apprenticeship levy is 100k, will making the large pension contribution reduce the employers NI and apprenticeship levy or are those fixed percentages and the amount I pay into the pension will not bring those amounts down?

Thanks

[cwah]

So I have finally had to succumb and through gritted teeth accept an inside IR35 contract. To try and minimise my PAYE tax liability I am planning on maxing out pension contributions so that I come in under the 40% tax rate, which at present means reducing my gross to about 50k. If for example the gross contact rate per year before employers NI and apprenticeship levy is 100k, will making the large pension contribution reduce the employers NI and apprenticeship levy or are those fixed percentages and the amount I pay into the pension will not bring those amounts down?

Thanks

Yes it does reduce NI liability but ONLY if you do it as salary sacrifice.

[juckky]

Yes it does reduce NI liability but ONLY if you do it as salary sacrifice.

I understand that it will reduce the "employees" PAYE NI liability, but are you saying it does reduce the "employers" NI liability too?

[eek]

I understand that it will reduce the "employees" PAYE NI liability, but are you saying it does reduce the "employers" NI liability too?

Whether you avoid paying employers NI depends on your Umbrella / agency - an umbrella should send that money to your pension (as it's not their money) an agency might (or they may take it as profit) as it's not your money

[JHamp82]

As far as I understand, it should reduce both NI’s as well as income tax, but it may be best speaking to the agent/umbrella.

[eek]

As far as I understand, it should reduce both NI’s as well as income tax, but it may be best speaking to the agent/umbrella.

Only if the umbrella / agent play ball - there is no legal requirement for them to pay the employment NI side of things into your pension via salary sacrifice.