Umbrellas which offer 'Salary-Sacrifice' pensions

[DolanContractorGroup]

Hi VelcroPower,

We don't retain any of the saving, so I guess the only answer is that the employee receives its benefit.

Kind regards


Zeeshan

[buzz53]

Employer NI refund on large pension contribution by old geezer

What did you do in the end VelcroPower?

I am looking for an Umbrella with Salary Sacrifice which will pass on, or share with me, the Employer's NI which they will save when I make a large pension contribution. The contribution will be of at least my annual allowance so the "saved" ENI is about £5500. The UC is getting fixed amount from the agency no matter what I do so it seems the default position with most UCs is that Xmas has come ten times over! My situation is only slightly unusual in thatI am over pension age so I pay no Employee NI and hence will see no benefit at all in going via the Umbrella unless they will make this refund. In which case I might as well make my own pension arrangment and let HMRC have the loot instead, I'm sure they will be needing it!

TIA, Alan

[buzz53]

Nobody? I do need to make a decision quite urgently. Although my circumstances are a little unusual, I think this issue applies to anybody doing SS with a UC and involves potentially large sums so I'm surprised there's not more interest. Alternatively, if I am barking mad, I 'd hugely appreciate being put out of my misery.

Alan

[eek]

What did you do in the end VelcroPower?

I am looking for an Umbrella with Salary Sacrifice which will pass on, or share with me, the Employer's NI which they will save when I make a large pension contribution. The contribution will be of at least my annual allowance so the "saved" ENI is about £5500. The UC is getting fixed amount from the agency no matter what I do so it seems the default position with most UCs is that Xmas has come ten times over! My situation is only slightly unusual in thatI am over pension age so I pay no Employee NI and hence will see no benefit at all in going via the Umbrella unless they will make this refund. In which case I might as well make my own pension arrangment and let HMRC have the loot instead, I'm sure they will be needing it!

TIA, Alan

Did you read what Dolan wrote - any salary sacrifice from an umbrella will result in all the appropriate employer NI part being paid into your pension.

However Umbrella companies only charge a fixed weekly / monthly fee so I haven't actually got a clue what the rest of your post is on about - which probably explains why no one has replied...

[Paralytic]

Nobody? I do need to make a decision quite urgently. Although my circumstances are a little unusual, I think this issue applies to anybody doing SS with a UC and involves potentially large sums so I'm surprised there's not more interest. Alternatively, if I am barking mad, I 'd hugely appreciate being put out of my misery.

Alan

I suspect the lack of response is because your question has been answered here multiple times. There are posts with lists of Umbrellas that do Salary Sacrifice. I believe all pass the full NI savings onto you (I don't know of any now don't).

I doubt you'll get an UC to give you a refund because you're past pension age - they work on very tight margins, but do ask.

[lucyclarityumbrella]

Nobody? I do need to make a decision quite urgently. Although my circumstances are a little unusual, I think this issue applies to anybody doing SS with a UC and involves potentially large sums so I'm surprised there's not more interest. Alternatively, if I am barking mad, I 'd hugely appreciate being put out of my misery.

The amount paid to the pension should all be done via salary sacrifice, so you will be gaining the advantage as it reduces tax and both NI figures which would come out of the amount received from your invoice, as you are over state pension age it just means that the Employers NI will be reduced as the calculation is based on the taxable salary which is lowered by the amount of pension contribution made. No-one is making any savings here.

[ChrisTruby]

Hi VelcroPower,

So, when the umbrella employee gets paid, the additional salary sacrifice will be done from the "bonus" element as this can be reduced for the purposes of tax treatment/efficiency, whereas the minimum wage element can't be.

I hope this answers your question.




Under the umbrella model, workers are paid their salary in 2 parts; the NMW and the "bonus" or "profit share". It all looks the same on the payslip as a normal PAYE employee, but in the background the calculations have to take into account both of these parts because the minimum that has to be paid in all instances is NMW. The bonus element can vary dependent on pension or business expenses.

Hope this helps.

Kind regards


Zeeshan

Can I ask if this is ok to do (the bonus aspect for salary sacrifice) as when reading this link on HMRC's website about tax avoidance schemes this sounds like a lot like what you are suggesting?

Umbrella companies offering to increase your take home pay (Spotlight 45) - GOV.UK

[ShandyDrinker]

Can I ask if this is ok to do (the bonus aspect for salary sacrifice) as when reading this link on HMRC's website about tax avoidance schemes this sounds like a lot like what you are suggesting?

Umbrella companies offering to increase your take home pay (Spotlight 45) - GOV.UK

I'd say do your own further research. Salary sacrifice is not tax avoidance as far as I'm aware. I recall salary sacrifice pension schemes being a thing in my last permie job 13 or so years ago now.

The following may also be useful - Salary sacrifice for employers - GOV.UK

[eek]

Can I ask if this is ok to do (the bonus aspect for salary sacrifice) as when reading this link on HMRC's website about tax avoidance schemes this sounds like a lot like what you are suggesting?

Umbrella companies offering to increase your take home pay (Spotlight 45) - GOV.UK

Dolan have just made things too complex by explaining things badly.

The actual logic is:-

An umbrella company needs to pay paid minimum wage - that is what Dolans called your base pay / salary.

Everything else is a "bonus" which can go in only 2 directions

1) as salary. All appropriate tax is paid and what remains is paid as part of your salary payment into your bank account alongside your base pay / salary.

2) it can be sent to your pension scheme via salary sacrifice.

The schemes referenced in Spotlight 45 - are using tricks to pay you money immediately without the tax being paid on the money. Paying money into your pension isn't that.

[ChrisTruby]

Dolan have just made things too complex by explaining things badly.

The actual logic is:-

An umbrella company needs to pay paid minimum wage - that is what Dolans called your base pay / salary.

Everything else is a "bonus" which can go in only 2 directions

1) as salary. All appropriate tax is paid and what remains is paid as part of your salary payment into your bank account alongside your base pay / salary.

2) it can be sent to your pension scheme via salary sacrifice.

The schemes referenced in Spotlight 45 - are using tricks to pay you money immediately without the tax being paid on the money. Paying money into your pension isn't that.

See that makes a lot of sense and that's what I hoped but when seeing the word bonus alarm bells went off. ?

Thank you!