Too good to be true?

[DrFfybes]

MrsF gets a pension, subject to zero tax relief and so tax is paid at 20%.

She also works and is PAYE, but pays into a Salary Sacrifice AVC scheme alongside occupational pension scheme. This attracts tax relief at 20%, and NI relief at 12%.

The 2 incomes combined take her over £50k, so extra tax would be due, however the SSAVC brings her back to £49,9xx in total.

Am I correct in thinking that she is effectively getting 40% tax relief and 12% NI on the SSAVCs, as every £100 she sacrifices reduces takehome by £68, and she gains another £20 which would otherwise be due as underpaid tax?

Paul

[TUK020]

seems about right, but I am not an expert.

If she were not doing SSAVC, then her income would be over 50k, and therefore on a marginal rate of taxation of 40%.
She is getting extra as the combined sources of her income mean that she is paying a higher rate of NI.