From the 6th April 2010, the personal allowance (£6,475) is due to be gradually removed when income reaches £100,000 and completely disappear for those earning over £112,950. This means an individual earning £112,950 will only receive take home pay of £5,051 for the income between £100,000 and £112,950 - an effective tax rate of over 60%!!
For those employers willing to allow employees to contribute to a pension via salary sacrifice, there is a great opportunity - reduce your salary in return for an employer pension contribution.
As an example, if someone earning £112,950 reduces there salary to £100,000 in favour of pension contributions, this could result in a pension contribution of £14,607 (£12,950 plus National Insurance saving of 12.8%)
