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salary sacrifice/ housing benefit CONFUSED!!!


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Hello all,

I'm hoping somebody can help. I'm having a lot of trouble with housing benefit claims. I work part time and my hours can change abut the amount of benefit they allow me never seems to reflect a drop in earnings only when my earnings go up do my benefits seem to drop. I'm trying to sort that and have been for a number of years. I give up sometimes then a situation arises that starts me on the campaign again. Anyway, the point I'm looking into now, alongside all the rest, is SALARY SACRIFICE. I have a bike through cycle sheme. I didn't look at the small print when I joined, all I knew was that you get a bike of your choice on hire from your employer for a year to travel to and from work. You sacrifice part of your salary to pay for it, which reduces your gross income . After the year you have the choice to extend the hire for a year or so for a % cost of the bike, then it's yours! That is a simplification.

The question I have is this. If it reduces your gross pay, shouldn't this reduced amount be the figure benefits are calculated on after tax and NI? Pension is also taken from gross pay before tax, thus reducing gross pay again but housing benefit only allows 50% of your pension deduction to be allowed off your gross earnings. Is this the same with salary sacrifice such as cycle scheme or childcare vouchers?

Part of the reason I'm asking is nobody at my local authority seems to know! I also read that more well off families are using salary sacrifice to reduce their gross income so they can still get child benefit. Any help very gratefully received. Thank you.

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I'm not 100% certain as Im not an HB processor.

The salary sacrifice for you bicycle is technically a loan which is repaid directly from your salary and if you were to leave the employment for any reason the loan would need to be settled before leaving the position.

I think that HB will still look at your gross wage but will have the necessary deductions for tax, NI and 1/2 pension contributions reduced as normal.


finding it hard to find any information to confirm sorry but this link does have a section right at the end about a cycle salary sacrifice so may be able to answer your enquiry.

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