Salary sacrifice for business owners and high earners
The 50% highest rate income tax band comes into effect on 6th April 2010 for those with incomes of more than £150,000.
Additionally, the personal allowance is gradually reduced for those earning more than £100,000 and completely disappears for those earning £112,950 or more.
Is it time to reconsider that old chestnut “the salary sacrifice technique”?
By sacrificing some salary in return for a pension contribution, significant tax and National Insurance savings can be made by both Employees and Employers. This will no doubt appeal to owner Directors as well as high earners who have some control over their remuneration strategy.
This is an excellent formula for building pension benefits for later in life.
It might not suit everyone and your own individual goals and objectives should be considered but this is definitely a topic for the new tax year well worth a new discussion with your accountant or financial adviser.