Tuesday, May 08, 2012

Don't mention the ...Pension tax advantages on your P60!

I've just been trying to work out what on earth my P60 actually means? To any non-Brits looking at this post, every year in the UK if you are employed your employer should send you a legal certificate showing your salary and how much you have paid in income tax and national insurance. It also use to show how much you paid into your company pension scheme.

But for some reason - no longer? My P60 just shows my income for the year "net" of my pension contributions despite claiming to show my "total pay" for the year. Which is wrong since I know I earned more in that year than is shown on my P60. No wonder people get confused and don't know their true income nor more importantly, the advantages they may have from having a company pension scheme.

One of these many advantages of a company pension scheme is that it is usually paid out of your income before the taxman has a go at it and what this means is that your tax bill is slashed if you have a pension. What this also means to your wallet or your purse is that your pension is bumped up for free by the taxman!!! Result!

But you would not know that from your P60. It not only misleads you on your total income but it totally fails to show the benefit from being a part of a company pension scheme. Which is just plain daft and stupid. We should be encouraging people to save not only for their futures but also to save the State from forking out for those who retire with no private pension and then are totally dependant on the State.
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