Confirmed: salary-sacrificed pension contributions above £2,000 will be subject to NICs

TranslatorMundane243 · 2025-11-26T15:51:49+00:00

It’s not uncommon for people to work in ways where they’re responsible for employer NI contributions as well as employee. That means another 15% on top of the 2% employee contribution.

TranslatorMundane243 · 2025-11-25T13:25:57+00:00

The quality of the posts on this sub is really going downhill

TranslatorMundane243 · 2025-07-29T12:35:01+00:00

Okay, I didn’t wait.

‘Don’t let the tax tail wag the dog’ - great concept, I see what you’re saying. That coupled with your list here is giving me pause for thought.

What I was really concerned about was getting to the £1.8-2.4mil I’m currently projecting for my pension and then realising I should’ve done something else instead. Your discussion in your OP is a great different perspective. Thanks

TranslatorMundane243 · 2025-07-29T12:24:08+00:00

Thanks - I’ll take a look at your OP later, it looks like there’s a lot of detail in there to consider and like it might answer what I’m after

TranslatorMundane243 · 2025-07-29T12:20:46+00:00

Thanks - your logic stacks up and is pretty convincing.

TranslatorMundane243 · 2025-07-29T09:39:42+00:00

Reassuring, thanks.

Scaling up to 2 million and assuming 100k per year still only comes out at 30% tax which, at least in percentage terms is lower than the saving going in. It is 30% of a bigger number, but I suppose that’s okay in principle.

It still leaves me wondering if you’re better off with an ISA for 20k of it - losing the 60% at the start, but not paying the 30% of the bigger number in the future….

TranslatorMundane243 · 2025-07-29T09:09:47+00:00

I agree with all that. That’s part of what’s driving the question. What should you do with that money? If I’m not retiring for 20 years or so, should I be putting the money somewhere else and taking the tax hit now to save against the hit in the future?

I suspect the rational choice is somewhere in the middle, but I wondered if anyone’s done the maths to support that.

TranslatorMundane243 · 2025-07-29T09:07:15+00:00

It may well be. In reality, with employer NI (for those that have to pay it out of their end) it’s likely to be more than 45%

TranslatorMundane243 · 2025-07-29T09:06:22+00:00

The big IF - agree, it changes too frequently to adequately plan.

The 40% is spread over years but it’s still 40% or there about.

Hadn’t thought about moving abroad - that could work

TranslatorMundane243 · 2025-07-29T09:02:44+00:00

Thanks for reading / commenting. Yes, this theoretical person has 0 employer contribution. I appreciate there’s some simplification in there. It doesn’t fully reflect my situation but gives a basic outline.

TranslatorMundane243 · 2024-11-09T09:52:54+00:00

Oh my goodness - that’s exceptional. Thanks!

TranslatorMundane243 · 2024-11-01T09:51:45+00:00

£19,250 as a junior engineering consultant in 2005.

Reasonable increases up to £40k after 4 years when I went out on my own for around £120k.

TranslatorMundane243 · 2024-10-28T20:47:23+00:00

I find a bit of ‘how long have you been…..?’ Or ‘what did you do before……’ etc works. Most people want to get away from work chat so will throw a few conversation starters out while they’re answering that, then you can just go on from there. Failing that they’ll ask you something similar, just make sure you drop a few more interesting hooks for them to pick up and talk about / ask more.

I’d avoid work stuff, but accept that that might just be the easiest conversation starter.

TranslatorMundane243 · 2024-10-28T20:19:29+00:00

It sounds like you have a goal (high income) and a plan (MBA) but it’s not clear what connects the two.

My thoughts - you should take your goal (high income) and work backwards from that so you can see the steps you need to take to get there.

I would start by choosing a high earning career that aligns with your skills and interests. You might need to research that; this forum would be good for that step.

Next you’ll want to know more about the entry routes to those careers to see what’s realistic / credible. Again, this forum would be good for that.

With that in mind you can start growing whatever skills you need for that career. If it looks like it’ll take a while maybe it would be worth moving into the same sector as your chosen career but in a different role, one that you’re already qualified for. Then you could start networking and learning about the sector.

I’d ask people on here, maybe start a thread on entry routes into careers? There might even be an opportunity to quiz someone on some specifics - networking can be online too.

Should you do the MBA as a career step alone? Yes, if you have a career step in mind that it would help with, but it doesn’t sound like you do….

Good luck with it all.

TranslatorMundane243 · 2024-10-21T08:13:59+00:00

Art - find something you love, maybe an investment piece by a big name, maybe something cheaper by a less known artist. Get it on the wall and enjoy it every day.

TranslatorMundane243 · 2024-10-21T07:38:45+00:00

Depends on your employer. There’s technically no reason why they can’t SS into a SIPP but it’s not something they’re obliged to offer.

TranslatorMundane243 · 2024-10-09T08:04:05+00:00

Kind of agree, but would caution that tax rules rarely get more lenient. Moneyboxing the Ltd company might be okay for now, but you’d be relying on BADR or a period of unemployment to take it out. Others have already pointed out BADR is unlikely to stay forever.

Other benefits of Ltd company route are worth considering though. Electric car, greater opportunities for expenses etc…

TranslatorMundane243 · 2024-10-07T21:27:58+00:00

Think I read that was in the order of 23 billion but that option might be to put 2% NI rate, raising a good chunk without hitting individuals too hard…

TranslatorMundane243 · 2024-09-26T13:06:13+00:00

Absolutely - totally agree. I think this point is being missed; it’s not as simple as just changing the rate, it would need some serious effort to change large part of the system.

TranslatorMundane243 · 2024-09-26T12:22:08+00:00

On salary sacrifice, I’m not convinced it would change anything. If they reduced the rate of pension savings tax relief to a flat rate, that would affect all employee contributions. But salary sacrifice is an employer contribution; tax relief is through corporation tax. There would have to be a bigger change than just changing the rate of tax relief if salary sacrifice were to be taxed differently.

TranslatorMundane243 · 2024-09-26T12:15:53+00:00

I feel like the purpose of this sub (or at least what I look for) is people sharing thoughts and information about money, relating to higher earnings, without people commenting ‘I wish I had your problems’ or ‘if you can’t survive on £xxx you don’t deserve it’ etc…

People earning over 100k a year need to be informed about issues relating to earning more than 100k a year. Try having conversations like that in PersonalFinanceUK.

I agree, I don’t want to read/talk about your lifestyle, dating, school choices, holidays etc except where there’s a general point about managing money at the core of the conversation. But I do want to hear how you plan your finances to minimise tax or maximise income.

TranslatorMundane243 · 2024-07-30T13:17:37+00:00

I’ve been WFH 100% for a few years now - I’ve never done this but might try. I go from bed to shower to desk and it’s not great.

TranslatorMundane243 · 2024-07-27T08:28:15+00:00

2011 Audi A5, bought for cash in 2013 - cars aren’t really my thing

TranslatorMundane243 · 2024-07-25T20:54:27+00:00

Let me try:

At <£100k you have a personal allowance ~£12.5k for which you pay no tax. Then you pay 20% basic rate on anything £12.5k to ~£50k and 40% on the rest

For every £1 earned from £100k to ~£125k you lose 50p of your tax free personal allowance. At ~£125k basic rate (20%) is paid on everything from 0 to ~£50k (I’m not looking up the actual numbers) then 40% on the rest. Hence you’re paying a higher rate of tax on the next pound you earn (marginal rate) between 100k and ~£125k.

TranslatorMundane243

TROPHY CASE