AVC’s - Minimum Wage and Overtime

[Clappedoutpostie]

So I’m doing plenty of docket over the Xmas period and wanting to pay it into my AVC account to reduce tax/ni. I believe my hourly rate still has to be above the minimum to benefit from avoiding tax and national insurance. Am I correct in thinking this and would this then further apply to the hours I’m putting in on docket as obviously the hourly rate is less so I would need to take this into account as well. I’m trying keep my AVC deductions on the left hand side of my payslip, 1 time it ended up on the right hand side. Thanks in advance.

[RobertT]

All of your pension contributions benefit from tax relief(as long as you don't pay in more than you earn).

But you only qualify for NI relief(aka salary sacrifice/PSE) if you stay within the limits of that scheme. If you fall out of PSE, your deductions will move to the right hand side of your payslip and you will pay more NIC's.
I'm a bit out of the loop, but as far as I'm aware the PSE rules associated with contribution limits and overtime as stated
in this 2021 CWU update still apply to members of the RMCPP and Nest.

Although I believe the participation threshold is now higher(£13,200?) and the hourly rates obviously are.

[Clappedoutpostie]

Thank you Robert.

[heapsy]

So I’m doing plenty of docket over the Xmas period and wanting to pay it into my AVC account to reduce tax/ni. I believe my hourly rate still has to be above the minimum to benefit from avoiding tax and national insurance. Am I correct in thinking this and would this then further apply to the hours I’m putting in on docket as obviously the hourly rate is less so I would need to take this into account as well. I’m trying keep my AVC deductions on the left hand side of my payslip, 1 time it ended up on the right hand side. Thanks in advance.

Overtime does not count towards what you can pay in to AVCs. Only basic pay is used to calculate the figure allowed. If your take home pay drops below the minimum wage, you drop out of PSE. Simple.

[RobertT]

So I’m doing plenty of docket over the Xmas period and wanting to pay it into my AVC account to reduce tax/ni. I believe my hourly rate still has to be above the minimum to benefit from avoiding tax and national insurance. Am I correct in thinking this and would this then further apply to the hours I’m putting in on docket as obviously the hourly rate is less so I would need to take this into account as well. I’m trying keep my AVC deductions on the left hand side of my payslip, 1 time it ended up on the right hand side. Thanks in advance.

Overtime does not count towards what you can pay in to AVCs. Only basic pay is used to calculate the figure allowed. If your take home pay drops below the minimum wage, you drop out of PSE. Simple.

Not only do the CWU say OT can come into it, RM do too: copied from here

[mrcurve]

I would guess that it’s more about how many hours qualify as pensionable pay (+allowances).

If you’re on a 30hr contract the meaning of overtime might mean something different to you over a full timer.
They would already start overtime at an overtime pay rate, which would not be pensionable.

[RobertT]

The RMCPP website states that OT is pensionable for part timers up to full time hours.

So that OT would also be included when working out your personal PSE limit.

As you lose the benefit of PSE altogether if you breach the limit during a pay period, anyone wanting to save more towards their retirement, would be better off putting anything over into a personal pension.
Which will be particularly pertinent from April 2029 when the salary sacrifice threshold drops to £2,000 per year.