Auto-enrollment for higher rate tax payers

I am confused whether higher rate tax payer, who earns over £43,001, has to be enrolled?

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Hello to all,

May ask for your help to try to understand auto-ernollment for higher rate tax payers.

I am confused whether higher rate tax payer, who earns over £43,001, has to be enrolled?

To my understanding, employer who has an employee whom gets paid £50,000, would have to pay minimum contribution on qualifying earnings (£43,000 - £5,824 = QE £37,176)?

Or maybe that particular employee does not have to be enrolled, due to the fact that HMRC is only aiming at people with low and medium income.

Many thanks for your help.

Replies (11)

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By neiltonks
10th Feb 2017 11:34

Anyone earning over the auto-enrollment threshold (£10,000 per year pro-rata for the payment frequency) has to be auto-enrolled provided they meet the other criteria (age etc.).

Once enrolled the minimum contribution for a high earner is, as you say, calculated on earnings between the lower and upper thresholds.

Thanks (1)
By coops456
10th Feb 2017 11:36

I don't understand your confusion. All employees aged 22 and up to state pension age, and who earn over £10,000 must be auto-enrolled.

Whether the employer's chosen scheme is suitable to high earners, is up to the individual to determine. They can always opt out.

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paddle steamer
By DJKL
10th Feb 2017 11:41

They need enrolled.

I am now a member of an AE scheme and am in that category , last month I got my first ever (in my life) employer pension contribution, the vast sum of £30.97 and contributed £24.78 myself ( £30.97 net of BR tax)

Am going to be interested to see what reporting of AE employee contributions is supplied to employees at year end as they will surely need these re their tax returns.

If no total reported, either:

1. All payslips will need retained
2. The individual's personal AE pension account will have a facility to obtain the figure.

Given pensions up to now appear to have passed by an entire generation or two, more chasing at tax return time is likely trying to get clients to supply the numbers.

Thanks (2)
Replying to DJKL:
By petersaxton
10th Feb 2017 12:08

Why retain all payslips? The information is submitted on the FPSs. The cumulative figures should also be on the latest payslip for self assessment.

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Replying to petersaxton:
paddle steamer
By DJKL
10th Feb 2017 12:21

Did not know cumulative pension contributions re AE were shown on payslips as have nor yet run month two wages since going live on 1/1/17, if so that will be helpful.

Remember you will not have FPS for all clients as presume some are employees of business entities which are not your clients.

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Replying to DJKL:
RLI
By lionofludesch
10th Feb 2017 13:10

As far as I know, it's not mandatory, although I've ticked the box on Moneysoft Payroll to show it for all my employer clients.

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Replying to DJKL:
By petersaxton
10th Feb 2017 13:27

The FPSs tell HMRC the contributions and the latest payslip tells their accountant the contributions.

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Replying to DJKL:
By petersaxton
10th Feb 2017 13:28

The cumulative will have have YTD on month 1 payslip.

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RLI
By lionofludesch
10th Feb 2017 13:07

Baffled by the question and the muddled thinking behind it.

Is he between 22 and pension age ? If yes, does he earn more than £10000 ? Yes - he has to be enrolled.

If he doesn't like it, he can opt out.

The pension scheme may cap contributions or it may not. depends how it was set up.

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abc
By Kim Jong Un's Hair
10th Feb 2017 13:55

I heard that if your earnings are an even number then you don't have to auto-enrol. Is that right?

Thanks (1)
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By HuntFord
10th Feb 2017 14:10

I'm sure by now you've read enough to know they have to be enrolled.
I'll stick my oar in here and bring up the tax relief issue. If your employee is a higher rate or additional rate tax payer then the tax relief usually on offer through these schemes will be insufficient. As an example, NEST will top up an employee's pot by 20%, but that's not right for someone on higher earnings. In that case you'd need to then claim the rest of the tax relief, through self assessment.
Only a minor point, as I assume most people earning this much aren't staying in bog-standard schemes, but instead aiming for something with better output.

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