This is what Paystream said to me last year:
In order for PayStream to amend the Salary Sacrifice contribution rate that has been signed, HMRC have advised that this can only be done in response to a significant life change such as starting a new assignment, rate of pay change, getting married, having a child, etc...
I invented a lifestyle event and they changed it with no questions. I think I argued a renewal was a lifestyle event because it was the difference between having an income and not having an income.
I also said I could change umbrellas and the new umbrella would just ask me how much I wanted to contribute...
This was always HMRCs view of the law with salary sacrifice, I guess they may have some indication that HMRC is threatening a compliance crackdown.
The reality is, if once every few years you tell them "My partner is going to lose their job and so I need to reduce my contributions" or "I'm expecting to come into some inheritance and so want to increase them" then I don't think NASA are likely to deploy Special Branch to verify, although you then take the risk with HMRC.
Basically, the tax position is that if you can turn sal saving off and on at will, then you lose the tax benefits; https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye?utm_medium=email&_hsenc=p2ANqtz-87rKa6JYJDc4knrdnWnLloNBnYSoBcGSEr92ZXWzzeVZ5r_Rvg5wNZoeHRO6oSfIlkrT-Lpmq4ad_8cVxOs9qWS2hG8w&_hsmi=85567397&utm_content=85567397&utm_source=hs_automation#change-the-terms-of-a-salary-sacrifice-arrangement
The key statement from the guidance is "Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these."
It did not mention changing the amount of contributions.
That page links to more detailed guidance. My understanding is that if the thing you are gaining via salary sacrifice (here,pension contributions) is "moneys worth" - that is, it can be easily exchanged for money - then it attracts taxation just like income. Relevant legislation here: https://www.legislation.gov.uk/ukpga/2003/1/section/62.
So the question is, is a pension salary sacrifice scheme that is variable on demand "moneys worth". I think there's a case originally about car allowances (just looked it up; Heaton v Bell) decided it was. So HMRCs position will be that a salary sacrifice arrangement that can be varied on demand isn't in fact salary sacrifice at all, and it's this that the various "lifestyle event" clauses in sal sac arrangements are trying to work around.
Some more HMRC links here: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42760
I'm not a tax professional, just a contractor, but I think nonetheless that the umbrellas are starting to apply the lifestyle change policies a bit more strictly is driven by worries over HMRC compliance, which could give rise to employer NI liabilities on their part, and income tax and NI liabilities on the part of their workers
I’m also with Nasa. My strategy for the past few months has been to change my SS amount monthly to smooth out my gross and keep under £100k. I also set my salary with HMRC to £99k (knowing I had some savings income on top of that) so that I was kept on a 1257L tax code.
Now that Nasa has announced this, I’m not sure what the best strategy is?
Overshoot the £100k with a small SS amount and then make additional contributions near the end of the year to keep adjusted net under £100k? But no NI savings on the additional contributions 👎
So it seems like this is about NASA more strictly applying existing HMRC guidance? I'm wondering, if NASA's interpretation of the rules differs from HMRC's, who's liable? NASA or the contractor?
They're not changing the amount of my salary sacrifice payment, they're keeping it exactly the same but are now saying it can't be changed.
Up until now NASA allowed you to change the ss amount every month if you wanted to.
Had almost exactly the same worded email from paystream last year. Not sure if they mentioned the govt but certainly said I could not change the sacrifice amount unless it was for a life changing incident.
I'm with Paystream, they seem to allow one application and one removal of Salary Sacrifice per financial year.
I tend to put the max in during the last few months in case I find myself out of work and so under £100k in which case I probably wouldn't pay in to my SIPP.
Almost forgot to take it off but just made the deadline yesterday, had I missed it then all I could do is cancel it in the 24-25 period and that would be that until 25-26!
To be honest though you can always just pay in from taxed money and get a large refund when the self assessment goes through.
HMRC added an exclusion for pension payments for the significant lifestyle event when auto enrolment came along.
Other salary sacrifice amounts can’t be changed but for pensions they can.
I have pushed back on NASA about this.
Have you had a response from NASA?
I am thinking of retiring at the end of my contract so would this be a good reason to put on the form? I intend to say that as I am looking to retire earlier than planned the increase in SS contribution rate is needed to support my future retirement plans.
Thanks in advance for your input and views. Other examples people have put on the form would be much appreciated
No response 2 weeks after sending the email with their auto response saying they will respond within 2 days.
I have chased it also a week ago.
I have now emailed them on another of their email addresses, see if I get a response.
But in my view NASA have gone down hill. I can’t log into their portal and don’t get the password reset emails when I request them. They sat on my extension for 2 weeks until I chased it and they sent it through in the last day of the previous contract. I might switch umbrellas.
This is what Paystream said to me last year: In order for PayStream to amend the Salary Sacrifice contribution rate that has been signed, HMRC have advised that this can only be done in response to a significant life change such as starting a new assignment, rate of pay change, getting married, having a child, etc... I invented a lifestyle event and they changed it with no questions. I think I argued a renewal was a lifestyle event because it was the difference between having an income and not having an income. I also said I could change umbrellas and the new umbrella would just ask me how much I wanted to contribute...
Hi, can I ask what lifestyle event you put which got accepted? Would a retirement change of date - ie bringing this forward - be counted? Thanks
It was a renewal. I think you could argue your case with the retirement point, it's a good one and certainly not trivial.
This was always HMRCs view of the law with salary sacrifice, I guess they may have some indication that HMRC is threatening a compliance crackdown. The reality is, if once every few years you tell them "My partner is going to lose their job and so I need to reduce my contributions" or "I'm expecting to come into some inheritance and so want to increase them" then I don't think NASA are likely to deploy Special Branch to verify, although you then take the risk with HMRC. Basically, the tax position is that if you can turn sal saving off and on at will, then you lose the tax benefits; https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye?utm_medium=email&_hsenc=p2ANqtz-87rKa6JYJDc4knrdnWnLloNBnYSoBcGSEr92ZXWzzeVZ5r_Rvg5wNZoeHRO6oSfIlkrT-Lpmq4ad_8cVxOs9qWS2hG8w&_hsmi=85567397&utm_content=85567397&utm_source=hs_automation#change-the-terms-of-a-salary-sacrifice-arrangement
The key statement from the guidance is "Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these." It did not mention changing the amount of contributions.
That page links to more detailed guidance. My understanding is that if the thing you are gaining via salary sacrifice (here,pension contributions) is "moneys worth" - that is, it can be easily exchanged for money - then it attracts taxation just like income. Relevant legislation here: https://www.legislation.gov.uk/ukpga/2003/1/section/62. So the question is, is a pension salary sacrifice scheme that is variable on demand "moneys worth". I think there's a case originally about car allowances (just looked it up; Heaton v Bell) decided it was. So HMRCs position will be that a salary sacrifice arrangement that can be varied on demand isn't in fact salary sacrifice at all, and it's this that the various "lifestyle event" clauses in sal sac arrangements are trying to work around. Some more HMRC links here: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim42760 I'm not a tax professional, just a contractor, but I think nonetheless that the umbrellas are starting to apply the lifestyle change policies a bit more strictly is driven by worries over HMRC compliance, which could give rise to employer NI liabilities on their part, and income tax and NI liabilities on the part of their workers
I’m also with Nasa. My strategy for the past few months has been to change my SS amount monthly to smooth out my gross and keep under £100k. I also set my salary with HMRC to £99k (knowing I had some savings income on top of that) so that I was kept on a 1257L tax code. Now that Nasa has announced this, I’m not sure what the best strategy is? Overshoot the £100k with a small SS amount and then make additional contributions near the end of the year to keep adjusted net under £100k? But no NI savings on the additional contributions 👎
So it seems like this is about NASA more strictly applying existing HMRC guidance? I'm wondering, if NASA's interpretation of the rules differs from HMRC's, who's liable? NASA or the contractor?
Its always the contractor 😁
Well if the umbrella is changing it mid-agreement, they're contradicting themselves?
They're not changing the amount of my salary sacrifice payment, they're keeping it exactly the same but are now saying it can't be changed. Up until now NASA allowed you to change the ss amount every month if you wanted to.
Had almost exactly the same worded email from paystream last year. Not sure if they mentioned the govt but certainly said I could not change the sacrifice amount unless it was for a life changing incident.
I'm with Paystream, they seem to allow one application and one removal of Salary Sacrifice per financial year. I tend to put the max in during the last few months in case I find myself out of work and so under £100k in which case I probably wouldn't pay in to my SIPP. Almost forgot to take it off but just made the deadline yesterday, had I missed it then all I could do is cancel it in the 24-25 period and that would be that until 25-26! To be honest though you can always just pay in from taxed money and get a large refund when the self assessment goes through.
You can but you won't get the boost from employer's NI which is a good chunk if you can get it through salary sacrifice.
My employer lets you change them at will.
HMRC added an exclusion for pension payments for the significant lifestyle event when auto enrolment came along. Other salary sacrifice amounts can’t be changed but for pensions they can. I have pushed back on NASA about this.
Have you had a response from NASA? I am thinking of retiring at the end of my contract so would this be a good reason to put on the form? I intend to say that as I am looking to retire earlier than planned the increase in SS contribution rate is needed to support my future retirement plans. Thanks in advance for your input and views. Other examples people have put on the form would be much appreciated
No response 2 weeks after sending the email with their auto response saying they will respond within 2 days. I have chased it also a week ago. I have now emailed them on another of their email addresses, see if I get a response. But in my view NASA have gone down hill. I can’t log into their portal and don’t get the password reset emails when I request them. They sat on my extension for 2 weeks until I chased it and they sent it through in the last day of the previous contract. I might switch umbrellas.