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)
Please login or register to join the discussion.
I would contact BrightPay support if you haven't already done so. Their support team are excellent and very knowledgeable in my experience.
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
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...
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.
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.