I can't get my head around this and I hope someone can help! Simplifying figures for ease: £115k gross employment income before pensions. £10k employee pension payments. Looking at the 3 possible methods of pension contributions, is it the case that salary sacrifice could be disadvantaged as their 'threshold income' would be higher?
Relief at Source Method: £115k P60 salary less £10k pension contributions gives £105k threshold income
Net Pay Arrangement: Salary is £105k per P60, as £10k deducted from gross pay already. No add back so threshold income is £105k, as above.
Salary Sacrifice: £105k P60 salary as £10k deducted from gross pay already. But then salary sacrificed £10k gets added back to give £115k threshold income?
It seems odd to me that one method would result in different threshold income, so I don't know wheher I've minsunderstood the guidance.
Thanks in advance!