Salary Components- Medical Insurance + Pension

[Rahul05]

Hi Friends,

While working on my UK Tier-1 extension, I have come across following query, could you please help.

My salary components, as per my salary slip is as follows:

Reference Salary- £ A ( Basic component)
Bonus- £ B ( Performance Bonus)
Flexible Uplift- £ C ( Flexible component of contractual salary which varies based on what benefits you opt for)
- Flexible Benefits- £ D ( This is equal to flexible components you have opted for, in my case, private medical + Employee pension contribution + Employer pension contribution)

Payable net= (A+B+C-D)-( NI+ Taxes)

My question is: As per Tier-1 rules is my earning= (A+B+C) - Employer pension contribution? Or it is something else.

Basically, above questions boils down to whether Private Medical deducted from my salary and Auto enrolment pension contribution deducted from my salary( Only my contribution i.e. 4% of basic) is part of my Tier-1 earning.

Please help with your expert advise.

Regards,
Rahul

[Rahul05]

Hi ,

Looking forward to response from our experts.

Regards,
Rahul

[nks]

Whatever component show on your salary slip as 'gross salary' is likely to be your 'gross salary' for income points consideration as well...imho

[Rahul05]

Thanks for coming back NKS,

You are right in saying that gross component is a definitive answer.

However, the P11D form contains employee taxable benefits. Would it not be reasonable to say that any benefits included in P11D should be considered part of employee earnings for Tier-1 salary calculations? P11D components add towards taxation.

Employer pension contribution is definitely not part of earnings. However, same can not be said for the employee contribution towards pension (Though its not taxable).

Dear experts, a conclusion on this thread should be very useful for may of us. The salary brackets are high these days and it would really help if applicants can get the best possible figures by including all eligible salary components in their Tier-1 salary calculations (over and above gross ).

I look forward to your expert inputs.

PS: In a telephone enquiry with the Home Office, it was advised that employee contribution of pension fund is considered for Tier-1 salary calculations.


Regards,
Rahul

[nks]

Yes, employee contribution for pension can be included but you will have to do some explanation in your cover letter if it doesn't show already

[Rahul05]

Thanks for confirming. We can conclude that employee contribution part of salary can be considered as an earning.

Any takers on following, please?
1. Private medical, that appears on you P11D and hence is taxable.
2. Other taxable benefits such as company car etc.?
An informative response would be of great help.

Thanks,
Rahul