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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15976
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Salary sacrifice

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Hi. I am a higher rate tax payer, earning c£48000 per annum. I am also a pensioner and currently get a state pension of £780 per month. I took this pension because I need to pay off my credit cards and mortgage. However, I am paying a very high tax at the moment. I am on paye so I don't submit a tax return. I would like to take a salary sacrifice and I need to maintain around £2700 pay but I can't find out an exact calculation to allow me to do this. With the salary sacrifice I want to pay this into my pension pot. My employers have agreed, I just have to work out how much I need to pay. Can you help or point me to someone who can? Thanks.  My tax code is 25L .


You say that you need to maintain around £2,700 pay. Do you mean that you don't want your net of tax and NIC salary (your take home pay) to fall below £2,700 per month so that you end up with £3,480 in your bank (£2,700 - £780)? Is your state pension paid monthly (12 payments per tax year) or 4 weekly (13 payments per tax year)?
Customer: replied 2 years ago.

Did you get my reply to this question? I thought I sent it but just noticed that my status at the top of the page indicates that you are waiting for me to reply.

I'm afraid that if you did reply, it hasn't come through to me.

Customer: replied 2 years ago.

Oh sorry, I'll do it again.

I need to receive a minimum of £2700 in my pay packet, plus my pension. I receive my pension every four weeks, so my taxable pay is c£55k I think which is why I pay so much. Do you need any more info?


Can you tell me what your monthly take home pay is currently please.
Customer: replied 2 years ago.

My current payslip states:

total gross pay £3923, gross for tax £3923, Earnings for NI £3532 (although I am over 60 so don't pay NI any more. My year to date pay is £19618, tax paid 5155, and I pay £117.71 for my pension (sorry, told you the wrong amount earlier). However I have just been awarded a 3.5% payrise so I estimated my earnings at just over £48,000 - this takes effect from this month so the above amounts will go up slightly. Is that enough info?

Also, when I get a figure to do this, what do I have to do next? Write to the tax office?


Leave this with me while I draft my answer.
Customer: replied 2 years ago.

Thanks. I realised that I didn't actually say what my current take home pay was - for August it was £2772. But of course it will rise in September.

Hi again.

You might use the calculator here to predict your tax deduction based on the information you plug into it when your pay and tax code change. I've assumed that the tax code of 25L is correct and have used the pay to date and tax tp date figures.

Assuming that your new salary level of £4,000 per month will take effect from the end of this month, if you sacrifice a total of £375 per month including the £118 you already pay, then you should end up with about £2,713 net pay per month, paying £912 per month in tax.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

That's helpful thank you. ***** just write to the tax office saying that I am taking a salary sacrifice or is that necessary, as it is just my employer that is involved?

No, you don't need to do anything. It will be done through the payroll.

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