Products
Savings
Salary Exchange for Pension Contributions
£30,000 per annum and 5% pension contribution
| BEFORE - Per Month | AFTER - Per Month | ||
|---|---|---|---|
| Net pension contribution | £100 | Net pension contribution | - |
| Tax relief | £25 | Tax relief | - |
| Gross pension contribution | £125 | Gross pension contribution | - |
| Employer pension contribution | £125 | Employer pension contribution | £250 |
| Monthly take home pay | £1,785.35 | Monthly take home pay | £1,799.10 |
| Increase in take home pay | £13.75 | ||
| Increase in annual take home pay | £165 | ||
£75,000 per annum and 5% pension contribution
| BEFORE - Per Month | AFTER - Per Month | ||
|---|---|---|---|
| Net pension contribution | £250 | Net pension contribution | - |
| Tax relief | £62.50 | Tax relief | - |
| Gross pension contribution | £312.50 | Gross pension contribution | - |
| Employer pension contribution | £312.50 | Employer pension contribution | £625 |
| Monthly take home pay | £3,963.37 | Monthly take home pay | £4,028.99 |
| Reclaim higher rate tax | £62.50 | Increase in take home pay (includes £62.50 tax relief) | £65.62 |
| Increase in annual take home pay (includes £750 tax relief) | £787.44 | ||
Please Note:
Although the increase in your take home pay may only appear to be small, please remember that this is extra pay that you would not have otherwise received.
You will still continue to receive tax relief on your pension contributions, although this will now be at source through payroll.
The examples are for illustration purposes only and do not confer any right to the potential increase in take home pay illustrated above.
Your actual payslip may differ from that shown above.
Income tax and National Insurance rates are subject to change and, as such, these examples are not binding on Stephenson Harwood.
The actual increase in your take home pay depends on your current pay and normal pension contributions.
The examples are based on the latest available figures (at the time of writing) for the standard single person's income tax and National Insurance contribution rates and allowances.
If you earn more than the Upper Earnings Limit (£43,875 for the 20010/11tax year), the improvement in your net pay is not as significant because you pay a lower rate of National Insurance on earnings above this limit.
If you are a higher rate tax payer, by participating in the Salary Exchange scheme you will no longer need to make a separate claim for higher rate tax relief.
Holidays
If you choose to buy additional holidays, your gross pay will be reduced accordingly and you will pay less income tax and National Insurance.
If you choose to sell holidays, the cost will be calculated as 1/260th of your full time basic salary. This amount can then be used to purchase other benefits within SH Online Reward but cannot be taken as a cash payment
Assumptions
- Your tax saving is calculated using your highest prevailing rate of income tax.
- Contracted-in NIC rates (if you are contracted-out, your saving will be less).
- Standard single person's tax coding.
- You receive only your basic salary - any additional payments (such as overtime) may affect the saving.
Disclaimer: This is provided for illustrative purposes only, based on the above assumptions, and is no guarantee of a saving.
Childcare Vouchers
This benefit has an income tax and NI exemption for the first £55 per week (£243 per month) spent on approved childcare.
Depending on your personal circumstances, there may also be some disadvantages, such as the impact on certain State benefits you may be entitled to, including Working Tax Credits and the State Second Pension (S2P). In particular, anyone with an annual salary of less than £13,000 should seek appropriate financial advice before choosing this benefit.
Assumptions
- Your tax saving is calculated using your highest prevailing rate of income tax.
- Contracted-in NIC rates (if you are contracted-out, your saving will be less).
- Standard single person's tax coding.
- You receive only your basic salary - any additional payments (such as overtime) may affect the saving.
Disclaimer: This is provided for illustrative purposes only, based on the above assumptions, and is no guarantee of a saving.
Retail Vouchers
If you choose to purchase retail vouchers, the amount you choose will be paid out of your net pay as any income tax and NI liability has already been paid.
The retail vouchers are purchased at a discount to their face value; for example a £10 Sainsbury's voucher will cost you £9.50.
If you purchase Sainsbury's vouchers to the value of £240 each month (i.e. £60 for each weekly shop), the cost to you would be £228.00 (not including any postal fees). This gives you a saving of over £144 each year.
If you purchase petrol at Sainsbury's and choose to double the amount of vouchers you receive to £480 each month, you can save almost £300 each year, amounting to almost three weeks of 'free' food and fuel.
Cycle2Work
The Cycle2Work Scheme operates as a Salary Exchange arrangement. You give up a proportion of your salary in return for the use of a cycle supplied by the Firm. If you choose a Cycle2Work voucher, your salary will be contractually reduced for a period of 12 months.
As the Cycle2Work Scheme conforms to Her Majesty's Revenue & Customs (HMRC) requirements, you will have no income tax or NIC liability on this benefit.
Depending on your personal circumstances, there may also be some disadvantages, such as the impact on certain State benefits you may be entitled to, including Working Tax Credits and the State Second Pension (S2P). In particular, anyone with an annual salary of less than £13,000 should seek appropriate financial advice before choosing this benefit.
Assumptions
- Your tax saving is calculated using your highest prevailing rate of income tax.
- Contracted-in NIC rates (if you are contracted-out, your saving will be less).
- Standard single person's tax coding.
- You receive only your basic salary - any additional payments (such as overtime) may affect the saving.
- You complete the 12 month hire agreement period.
Disclaimer: This is provided for illustrative purposes only, based on the above assumptions, and is no guarantee of a saving.