Published On: Tue, Oct 5th, 2021

How to legally pay less income tax & boost pension pot – ‘it’s a win win’ | Personal Finance | Finance

Assuming they then want to make a £1,000 pension contribution, £200 of that is covered by Income Tax relief, but National Insurance of £132.50 will still be payable.

However, in a salary sacrifice scheme, where the employee simply gives up £1,000 of pay in return for a pension contribution of £1,000, there is no Income Tax or National Insurance to pay on the income forgone.

In addition, the employer makes a national insurance saving of £177 under the new tax rates.

Effectively, employer and employee share a windfall of £309.50.

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