SIPP with umbrella

[mogga71]

Hi

The 13.8% Employers NIC is one of the costs. There is also the apprenticeship levy.


Kind regards

Zeeshan

Hmmm ... are you saying that you deduct the 13.8% Employers NIC and Admin Levy before you pay into the SW Pension? If so, surely that negates the whole reason of going down the salary sacrifice route?

Forgive my ignorance.

[eek]

Hmmm ... are you saying that you deduct the 13.8% Employers NIC and Admin Levy before you pay into the SW Pension? If so, surely that negates the whole reason of going down the salary sacrifice route?

Forgive my ignorance.

I believe Zeeshan is talking about the statuary employer's pension contributions that have to be paid - salary sacrifice is entirely separate.

As with all these items my personal advice would be to just use clarity.

[mogga71]

In simple terms - paying into a pension via salary sacrifice will reduce all tax and NI contributions

I would have agreed with you up until yesterday but reading this thread and this from Clarity Umbrella :

"
This means that you make contributions from your pay after the deduction of tax− if you pay tax. If you are eligible for tax relief, NEST will claim this for you from HMRC and add it to your pot. This means that you make contributions from your pay after the deduction of tax− if you pay tax.
"

... I am not so sure.

If payments into your pension are only made after all deductions ... including 13.8 Employer NI ... what is the point of going down the salary sacrifice route? You may as well go full PAYE and then put your money in your own SIPP when in your personal bank account and then reclaim the extra tax relief if a high earner.

The whole idea of SS was that it was supposed to be done before Employer NI ... not after....or am I missing something?

[Paralytic]

@mogga71, You need to provide the link or context of that quote from Clarity. It sounds like its not talking about salary sacrifice, but of paying into a pension pot from your net pay.

[mogga71]

@mogga71, You need to provide the link or context of that quote from Clarity. It sounds like its not talking about salary sacrifice, but of paying into a pension pot from your net pay.

Thanks .... I think (and indeed hope) you are correct : The Clarity link that includes the lines is at :

The Nest Pension Scheme - Umbrella Pensions - Clarity Umbrella Ltd

...it is not talking about SS by the look of things.

TBH its looking like a toss up between Clarity and ContractorUmbrella at this point.

[DolanContractorGroup]

Hmmm ... are you saying that you deduct the 13.8% Employers NIC and Admin Levy before you pay into the SW Pension? If so, surely that negates the whole reason of going down the salary sacrifice route?

Forgive my ignorance.

Hi mogga71,

The Ee'rs NIC and Apprenticeship Levy are costs to the business for employing the workers. They are first deducted from the umbrella income (along with the margin), and then the salary sacrifice amounts such as your pension are calculated before the system calculates the PAYE amounts.

Hope this helps.


Kind regards

Zeeshan

[contractor_coop]

Thanks .... I think (and indeed hope) you are correct : The Clarity link that includes the lines is at :

The Nest Pension Scheme - Umbrella Pensions - Clarity Umbrella Ltd

...it is not talking about SS by the look of things.

TBH its looking like a toss up between Clarity and ContractorUmbrella at this point.

It would also be worth considering The Peoples Pension.

They provide the option contribute via salary sacrifice and their charges are lower than Nest.

See: Compare auto-enrolment providers | Pension plan options | The People’s Pension

[lucyclarityumbrella]

We have to quote what Nest provide us with as standard AE text but we offer the additional salary sacrifice element. I could bore you with it all coming down to the reverse calculation to work out the employers NI which in turn affects all figures. All down to what calculates what from the Gross or from the Taxable Salary figure BUT in essence all figures drop.

Happy to talk you through it although I cannot promise not putting you to sleep

[eek]

Hi mogga71,

The Ee'rs NIC and Apprenticeship Levy are costs to the business for employing the workers. They are first deducted from the umbrella income (along with the margin), and then the salary sacrifice amounts such as your pension are calculated before the system calculates the PAYE amounts.

Hope this helps.


Kind regards

Zeeshan

So Dolan's policy is to not pay the employers NI into the pension contribution but to give it to HMRC instead? To me the entire purpose of using an umbrella was because pension contributions can be taken from any payment the umbrella receives before any tax is deducted. (For ease of explanation I'm ignoring umbrella fees and the fact you need to paid the appropriate minimum wage).

Lucy could you confirm my understanding or have things changed?

[DolanContractorGroup]

So Dolan's policy is to not pay the employers NI into the pension contribution but to give it to HMRC instead? To me the entire purpose of using an umbrella was because pension contributions can be taken from any payment the umbrella receives before any tax is deducted. (For ease of explanation I'm ignoring umbrella fees and the fact you need to paid the appropriate minimum wage).

Lucy could you confirm my understanding or have things changed?

Hi eek,

Sorry if I'm misunderstanding, but the Ee'rs NI has always been paid to HMRC, and this has never changed.


Kind regards

Zeeshan