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Nest and salary sacrifice on Brightpay

Nest and salary sacrifice on Brightpay

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Hi, 

I have a client who has just taken on a new employee with a contract in place for a salary sacrifice pension. I am getting all confused over how to apply this on Brightpay and if NEST will even allow it.

What I have currently done in bright pay:
1.Added employee to payroll, enrolled them onto pension and selected relief at source (now I am thinking i should select no tax relief)
2. Added employees pay
3. Added a salary sacrifice of 5% and ticked deduct before PAYE and NIC, (but not ticked deduct before employee or employer pension.)
4. Set employee pension contribution to 0%
5. Set employer contribution to 8% (3% plus employee 5%)
6. On NEST I have set Contribution level to Custom (define my own amounts) and marked as 8% employers and 0% employee.

I am fairly certain I have gone wrong somewhere and any help would be very much appreciated.

Replies (10)

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By Mr Hobbit
16th Feb 2021 13:56

I would contact BrightPay support if you haven't already done so. Their support team are excellent and very knowledgeable in my experience.

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Replying to Mr Hobbit:
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By harpsong
16th Feb 2021 14:24

Thank you, I found this already, and it was indeed quite helpful. I am just unsure of whether I should be ticking the box to deduct the salary sacrifice before employers pension or not, which i believe would be based on terms in the employment contract

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By Not Anonymous
16th Feb 2021 15:09

Salary sacrifice is the employer paying more which means no pension tax relief is due.

And as such cannot be "relief at source" as these could only apply to an employee contribution, not employer contributions

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Replying to Not Anonymous:
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By harpsong
16th Feb 2021 15:38

Thanks, quite right. In which case it doesn't matter what I select as the employee contribution is nil.

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By Mr Hobbit
16th Feb 2021 16:07

It might be worth checking this with NEST directly. You maybe required to setup a separate group in NEST for salary sacrifice.

https://www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calcu...

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Replying to Mr Hobbit:
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By harpsong
16th Feb 2021 17:02

Hi, yep I found that one already. I did do some research before posting. And I believe i have got it right now :)

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Replying to harpsong:
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By Mr Hobbit
16th Feb 2021 17:15

That's good news!

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By tom123
17th Feb 2021 15:45

Don't use that system, but I think you may be double counting.

Employee is paying 5% (via salary sacrifice)
In addition Employer is paying 3%

Total 8.

Your way, I think you get 11.

Chances are there will be a report that shows the employee deduction, as well as then showing that the whole amount should be treated as an employer contribution.

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Replying to tom123:
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By Hugo Fair
17th Feb 2021 19:47

Placing my pedant hat firmly on my head ...

"Employee is paying 5% (via salary sacrifice)" - is not true.
The whole point (and definition) of Salary Sacrifice is that it is a contractual reduction in salary (not a deduction from it).
So employee has a lower salary than before, from which zero EE pension contribs are deducted; whereas ER pension contribs have increased (to 8% in your example).

How you get those values into and processed by a particular software package may well be another matter.

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