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Salary Exchange under SuperTrust UK

More information

National Insurance contributions

 

National Insurance contributions are applied to earnings gross earnings actually paid. If salary is exchanged in return for an equal pension contribution from the employer, gross earnings are reduced giving a smaller National Insurance liability for both employer and employee without any change in the amount of pension investment.

 

For assistance setting a Salary Exchange arrangement under the SuperTrust SMART Scheme, please contact us at advisersupport@supertrust.co.uk

The Lifetime Allowance

 

There is a Lifetime Allowance set by the government (£1.25m as at 2017). If you draw benefits which are valued in excess of the Lifetime Allowance you will have to pay tax on the excess.  (See section on Tax below).

No tax is due until your benefits have vested and exceed the Lifetime Allowance (subject to relief given by primary/enhanced / individual protection).  Since you may draw benefits at different times from different schemes and might only draw part of your entitlement, special arrangements need to be followed to ensure that tax is correctly applied.

This works by your scheme giving you a certificate of what proportion of your Lifetime Allowance has been used by the benefits you elect to take.  It is ESSENTIAL that you retain these details as you will need to certify, to all scheme administrators whenever they quote payment of retirement benefits, whether your Lifetime Allowance will be exceeded if you take the benefits quoted.

If you have registered primary/enhanced protection with the Inland Revenue you will need to supply a copy of your registration certificate to the administrator to allow the correct with-holding tax to be applied.

If you have used part of your Lifetime Allowance but cannot certify that the quoted benefits keep you within the Lifetime Allowance, the administrators are compelled to with-hold tax on the whole of any benefits paid.

If you take benefits, at the same time, from more than one scheme and either will cause you to exceed your Lifetime Allowance, then you must tell one of the administrators to regard themselves as paying the benefits first

Annual Allowance

 

An Annual Allowance is the maximum amount an individual can contribute to a pension scheme which is relieved of  tax.

Tax Year Annual Allowance
2014/15 £40,000
2015/16 £40,000*
2016/17 £40,000**

Note

 

Lower amounts may apply if you have started drawing from a pension, or earning over £150,000 a year.

 

If you have unused allowances from any of the previous three tax years, you should be able to carry these forward for use in the current year. For example if you have not contributed to a pension scheme in the last 4 years, you can pay a total of £120,000 achieving tax relief.

 

To qualify for Carry Forward you must:

 

  • have had a pension in each year in which you wish to claim unused allowances
  • have relevant earnings for pension purposes, at least equal to the amount contributed

 

When determining your Annual Allowance you must:

 

  • ensure to include all pension contributions if you have multiple plans in accumulation
  • ensure to ‘Gross Up’ Contributions paid to the scheme ‘Net’ of tax

 

You can check your Annual Allowance using HMRCs calculator:

//www.tax.service.gov.uk/paac

 

 

Deadlines

To qualify for tax relief this year's rate you must the money are received by the pension scheme before 5th April 2018

Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. SuperTrust UK Master Trust is regulated by the Pensions Regulator (PSR Number: 10274116) as a provider of workplace pension schemes. All investments of the pension scheme are regulated by the Financial Conduct Authority (FCA). The trustees understand that based on correspondence with the FCA, scheme members have access to compensation under the rules of the Financial Services Compensation Scheme (FSCS) in the event of the insolvency or default by our investment providers.

©Supertrust UK Pensions Trustees Limited

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Tax Year Annual Allowance
2014/15 £40,000
2015/16 £40,000*
2016/17 £40,000**
Tax Year Annual Allowance
2014/15 £40,000
2015/16 £40,000*
2016/17 £40,000**
Tax Year Annual Allowance
2014/15 £40,000
2015/16 £40,000*
2016/17 £40,000**