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Nest Pension Contributions and taxable income

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Nest Pension Contributions and taxable income

Postby derekmoore » Wed Nov 04, 2015 12:20 pm

I have one employee on £9,000 per annum taxed under PAYE.

I have set up a NEST scheme for pension contributions and set it at the maximum limits as agreed with the employee of 5%.

This means as the employer I will be paying £37.50 per calendar month and she (the employee) will be paying £30 per month (net of BR Tax) from her pay.

If I (the employer) paid the employees NEST contribution of £30 instead of deducting it from her monthly wages. Would that £30 be classed as income for tax and NIC, or a benefit in kind, or neither as it is a pension contribution?

Regards Derek Moore
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Re: Nest Pension Contributions and taxable income

Postby atticus » Wed Nov 04, 2015 12:23 pm

viewtopic.php?f=4&t=107 - a reminder of the forum rules.

Consult your pension provider?
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Re: Nest Pension Contributions and taxable income

Postby derekmoore » Wed Nov 04, 2015 3:44 pm

Bit hard not to put my name to a post when its also my user name.

NEST pensions is the government scheme and I tried getting some sense out of the persons on the other end of the phone to no avail, they seem to be reading from the same script and getting higher than that is a waste of time.

My accountant is unsure also but trying to find out.

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Re: Nest Pension Contributions and taxable income

Postby atticus » Wed Nov 04, 2015 5:13 pm

No Advice?
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Re: Nest Pension Contributions and taxable income

Postby dls » Wed Nov 04, 2015 9:50 pm

The question you might ask is rather whether this is (as a benefit/income) exempt from taxation under the applicable rules.
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Re: Nest Pension Contributions and taxable income

Postby derekmoore » Fri Nov 06, 2015 10:21 pm

dls wrote:The question you might ask is rather whether this is (as a benefit/income) exempt from taxation under the applicable rules.


Thanks.

Accountant still checking.
Can't find anything as yet on the internet searches.
Calling NEST to get an answer is talking to an organic machine that reads from a script with no comprehension of what you are asking.

If no answer is forthcoming I'll pay the £30 difference until HMRC challenge me and then they will give me the ruling if one exists. Someone has to set precedence.

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Re: Nest Pension Contributions and taxable income

Postby atticus » Sat Nov 07, 2015 7:08 am

precedents.

Can you afford to run a test case? HMRC can. If there will be a lot at stake (not just your case but many like it), HMRC will take a case to the highest court they can.
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Re: Nest Pension Contributions and taxable income

Postby kvothe » Sat Nov 07, 2015 9:05 am

Just a couple of observations.

Most payroll is processed via software these days because of RTI. All of the reputable software vendors will be able to sell you a pensions module capable of handling the connection between your business and whichever pension provider you choose. The payroll needs to undergo a verification process before the contributions are calculated which will require the upload of data via your software or via a .csv file to the pension provider.

Secondly, the maths in the example is incorrect. There is an earnings calculation which effectively removes a chunk of income (currently £112 per week) and the percentage contribution is based on the residue. The contribution is also calculated on pay in the period (weekly, monthly etc) so it will take account of wage fluctuations. It is too simplistic to state that £9k per annum equals £x per month.
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