Page 17 - Budget 2021
P. 17
A WORTHWHILE SACRIFICE
PERSONAL SALARY SACRIFICE
CONTRIBUTION EMPLOYER CONTRIBUTION
(SACRIFICED AMOUNT + NIC
SAVING)
Tax Rate 20% 40% 20% 40%
£ £ £ £
Gross Salary 1,000 1,000 Nil Nil
Employer Pension Contribution Nil Nil 1,138 1,138
Employer NI Contribution (13.8%) 138 138 Nil Nil
Total Employer Outlay 1,138 1,138 1,138 1,138
Employee Salary 1,000 1,000 Nil Nil
Less Income Tax (200) (400)
Less NI Contributions (12%/2%) (120) (20)
Net Pay = Net Pension Contribution 680 580
Tax Relief 170 387
Total Pension Contribution 850 967 1,138 1,138
PLANNING POINT
On 6 April 2016 the standard lifetime allowance was reduced to £1,000,000. It has since been increased in line
with inflation twice and will now remain to £1,073,100 until 5 April 2026. However, there is still the possibility of
claiming transitional protection of up to £1,250,000.
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