Salary Sacrifice Pension & AVC

I have a salary sacrifice pension scheme set up in Sage. Employees can choose to make an additional voluntary contribution (as a % not a fixed amount).

When an AVC is set up they’re deducted before tax but not NIC on Sage - is this correct? I would assume that AVC’s would also be deducted before NIC was calculated like how to auto-enrolment deductions are taken but Sage doesn’t seem to do this. 

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    Normal pension contributions are deducted after NIC, so I would expect AVCs to be done likewise.

    With normal pension contributions whether the contributions are deducted before or after tax is dependent on whether the scheme is under Net Pay Arrangements or not - ie whether the tax relief in the contributions is done at the employer or the provider claims the tax back from HMRC (we use two schemes, one of which is under NPA with contributions take pre tax, and the other isn't with contributions taken after tax, but at a lower percentage - the full percentage includes the tax).

    A Salary sacrifice is slightly different - that is giving up part of your salary for a benefit: in the case of a sacrifice for pension, the amount sacrificed is an employer contribution to the pension, and the remaining salary is considered as their full salary for tax and NI (hence why a salary sacrifice seems to be taken pre NIC).

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    Hi Lisa,

    Great news, looks like Robert has answered your question. If that helps it would be great if you could click More > Verify Answer so it becoes easy for other members to seaarch for and locate the solution.

    Many thanks,

    Sage UKI