Too good to be true?
Posted: April 5th, 2022, 3:39 pm
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
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