Contributions and tax
Paying into a pension is not just about how much you contribute. Your enrolment communication will help you find out how much you and M&S will contribute, and if those contributions will increase in the future. You will also get tax relief from the government on anything you pay in. All of this means that it’s easier than you think to build up your savings.
M&S may offer you the option of paying by ‘salary sacrifice’ (sometimes called salary exchange). You can choose to give up part of your salary in return for an increased pension contribution from M&S. This means that your contribution is taken from your pay before tax, so you benefit from full tax relief straight away, and you save National Insurance too.
If M&S offers salary sacrifice, they will contact you with more information. Use our salary sacrifice calculator to see how you could benefit.
M&S will take your regular contribution from your salary before tax and pass them on to us, along with any additional amount that they’re paying in for you.
This means that you’ll benefit from full tax relief straight away.
If you don’t pay income tax because your earnings are below the income tax threshold, you will not benefit from the tax relief that a taxpayer would receive.
When you’re thinking of how much to contribute, you should bear in mind that there is a limited amount you can pay without incurring a tax charge.
Generally, you can pay in the equivalent of your entire annual salary each year (or up to £3,600 if this is more) and get tax relief. However, the government has put in place an annual allowance which includes any money that you pay in and any money that an employer pays in on your behalf, to this plan or any other pension plans you may have. If you exceed the annual allowance you will pay tax on any amount paid above it.
These allowances can change with each new tax year, depending on what the government sets out. Our Tax Year Rates and Allowances booklet will keep you up to date on what these allowances are, and how they could affect you.