Solidata Salary Sacrifice Calculator

Tax Relief Limits

If you're a basic rate tax payer, the tax relief is 20% on the whole of your contribution. If you're a higher rate tax payer, you get 40% tax relief on your contribution. If you are an additional rate tax payer then you may get additional tax relief on your contributions.

Salary Exchange/Sacrifice Example 2017/2018

Basic Rate Tax Payer

This example is for Donna Collier earning 24,000 per annum and currently paying a net contribution by direct debit into her personal pension plan of 120 a month (net 6% of salary). The client benefits from tax relief at source therefore the gross pension contribution will be 150.00 per month (7.5% of salary).

By using the Salary Sacrifice method Lisa reduces her salary to 21882.26 per annum and the employer makes the monthly pension contribution on her behalf along with an employer addition contribution of 100 (5% of salary) With savings of tax & NI made by the employee and employer the amount payable into the pension has increased from 250 to 300.83 a month. This is an increase of 50.83 monthly (609.96 each year) at no extra cost to either the employee or employer.

Donna has 'spendable income' of £1503.93 before salary sacrifice and also £1503.93 after salary sacrifice even though there is an extra £50.83 being invested into her pension each month.

View the actual basic rate taxpayer system generated calculation PDF document here:

Solidata PDF

Higher Rate Tax Payer

Bernard Saint is a higher rate tax payer earning 60,000 per annum
and currently paying a net contribution by direct debit into his personal pension plan of 300 a month (net 6% of salary). Bernard benefits from tax relief at source therefore the gross pension contribution will be 375 per month (7.5% of salary).

By using the Salary Sacrifice method Bernard reduces his salary to 55,344.83 per annum and the employer makes the monthly pension contribution on his behalf along with an employer addition contribution of 250 (5% of salary) With savings of tax & NI made by the employee and employer the amount payable into the pension has increased from 625.00 to 691.46 a month. This is an increase of 66.46 monthly (797.52 each year) at no extra cost to either the employee or employer.

Bernard has 'spendable income' of £3297.27 before salary sacrifice and also £3297.27 after salary sacrifice even though there is an extra £66.47 being invested into his pension each month.

View the actual higher rate taxpayer system generated calculation PDF document here:

Solidata PDF

Further examples are available to view in the demo version of SalSac.

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