Hutton

Good Afternoon
I have just attended an HMRC webinar on NMW and salary sacrifice.
I am still uncertain as to how making pension contributions via salary sacrifice affects NMW. If an employee elected to sacrifice all of their salary for a pension contribution, and that salary was within the annual allowance then under pension rules they could do this and receive tax relief on the entire contribution.
In such a case their contractual salary is unchanged the substance of the transaction is that their salary has just been diverted (sacrifice is really a misnomer). That person is the beneficiary of their pension account, and entitled to that pay, in the same way that they are a beneficiary of their bank account. There is the same entitlement to that money, they are just different pots.
In which case there is no reduction in wage, the wage has been received in full, it has just been paid differently, i.e. diverted rather than sacrificed - the wage has not been given up.