Contributions and tax

You pay 6% of your salary into SAUL and your employer pays 15%. You’ll get tax relief from the government on anything you pay in. All of this means it’s easier than you think to build up your savings.

Salary sacrifice

Instead of paying 6% of your salary into SAUL, you can agree with your employer to reduce your salary by 6%. This means that the money going into SAUL for you comes direct from your employer, rather than being counted as part of your salary. This is known as salary sacrifice.

Salary sacrifice means that the real cost to you of each monthly payment is lower. This is because you save on National Insurance as well as income tax.

Not all SAUL employers offer salary sacrifice. If yours does, they should tell you when you start your job and give you a chance to decide whether it’s right for you. They shouldn’t enter you into salary sacrifice without asking you.

There can be disadvantages to salary sacrifice. Because your salary is lower, the amount of money you can borrow for a mortgage or other loan may be lower too. You’ll also be paying less National Insurance, so it could affect your State Pension, tax credits and any means-tested state benefits you get.

Net pay

Your employer will take your regular contribution from your salary before tax and pass it on to us, along with the money they’re paying in to SAUL 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 won’t benefit from the tax relief that a taxpayer would receive.

Tax limits

You should bear in mind that there is a limited amount you can pay without incurring a tax charge.

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.