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Standard Life - Salary Sacrifice - Input

Version 8.1

[Details][Assumptions][Limitations]

The purpose of this calculator is to allow you to demonstrate that a client who is employed and considering making a payment to a pension, can actually have a larger amount paid into their pension by using 'salary exchange' or 'salary sacrifice'.

The calculator makes certain assumptions to enable basic calculations to be made. You must refer to these assumptions before completing the input.

This calculator is for information only and does not constitute advice. No guarantees are given or responsibility accepted for the effectiveness of any arrangements entered into as a result of using this calculator.

Adviser name:	Assumptions
Client's name:
Client's date of birth:	(DD/MM/YYYY)
Sex of client?	MaleFemale
Gross earnings (annual):
Personal allowance (if known):
Proposed employee payment gross from gross pay or net from net pay? (see Assumptions)	Gross from gross payNet from net pay
Gross monthly amount of employee payment:
Will benefits be taken within a year?	YesNo
How is client contracted-out?	Not contracted-outContracted-out via PPPContracted-out via COMPContracted-out via COSR
Fiscal year	2008/20092007/20082006/2007

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Standard Life - Salary Sacrifice - Additional Information

Details:

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You can explain to your client that instead of paying the payment themselves they should agree with their employer to take a reduction in their salary. The employer would then pay to a pension on their behalf.

The level of payment made by the employer could be that which the employee was considering making themselves, however it is more common for some or all of the savings made by the employer and employee, as a result of a reduced salary, to be contributed as well.

The possible savings are:

• Savings the employee makes in Income Tax and Employee National Insurance (NI).
• Savings the employer makes in Employer NI.

The calculator shows that if all the savings are paid into the pension along with the intended payment the employee was considering, then:

• the employee has the same net disposable income that they would have had, if they had made the contemplated payment themselves, and
• the cost to the employer of employing the employee doesn't change.

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Assumptions and Notes:

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The calculation makes the following assumptions:

1. Salary sacrifice cannot be done retrospectively. Previous fiscal years are for comparison only.
2. Taxable P11D benefits are ignored in the calculation of employer's National Insurance. However, this does not affect the overall calculation.

Please note:

1. Tax relief may be altered and its value depends on the individual's financial circumstances.
2. Payments made gross from gross pay are deducted from salary before the individual has been taxed, this gives higher rate tax relief at the point the contribution is paid.
3. Payments made net from net pay are paid net of basic rate tax relief after the individual has been taxed, any higher rate tax relief is allowed for in the tax calculation.
4. For individual payments, tax relief will be limited to payments not exceeding 100% of earnings, although there is no upper limit on what an individual can actually pay. The calculator limits contributions to 100% of earnings.
5. The abbreviations for the different methods of contracting-out are PPP (via a Personal Pension Plan), COMP (via an occupational money purchase scheme) and COSR (via an occupational final salary scheme).
6. This calculator does not take account of the proposed changes to the Personal Allowance announced by the Chancellor on 13 May 2008 as not enough information has been disclosed.

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Limitations:

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The calculation has the following limitations:

1. Where a client is aged 75 or over during the fiscal year selected, the calculator cannot be used.

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