Salary sacrifice pension

I'm a UK/US dual national living and working permanently in the UK.

At my former employment I was in a final salary pension scheme. The company had arranged a salary sacrifice agreement with HMRC so I sacrificed a portion of my gross pay in return for an equivalent contribution by the company, thus reducing my income tax/NI.

Just wondering what is the correct figure to declare on the US tax return for gross pay?

The pension element appears on my payslips as an adjustment to gross pay rather than a deduction.

So should I be declaring the gross pay before the pension adjustment or net of the pension contribution?

I'm a UK/US dual national living and working permanently in the UK.

At my former employment I was in a final salary pension scheme. The company had arranged a salary sacrifice agreement with HMRC so I sacrificed a portion of my gross pay in return for an equivalent contribution by the company, thus reducing my income tax/NI.

Just wondering what is the correct figure to declare on the US tax return for gross pay?

The pension element appears on my payslips as an adjustment to gross pay rather than a deduction.

So should I be declaring the gross pay before the pension adjustment or net of the pension contribution?

It depends whether you use the treaty to claim tax exemption on the contributions, or not.

It depends whether you use the treaty to claim tax exemption on the contributions, or not.

I'm not sure how that works in practice.

I want to claim the FEIE for all of my salary but not sure whether to declare the higher or lower figure. This may be slightly academic as my salary is low enough that it should all fall within the FEIE limit regardless of whether I pick the adjusted or unadjusted gross. I just don't want to pick the wrong option.

There is an employer's contribution too but this isn't stated on the payslip. Since it's a defined benefit scheme there is no individual valuation of the pension fund so I don't see a total of what is paid in.

I'm not sure how that works in practice.

I want to claim the FEIE for all of my salary but not sure whether to declare the higher or lower figure. This may be slightly academic as my salary is low enough that it should all fall within the FEIE limit regardless of whether I pick the adjusted or unadjusted gross. I just don't want to pick the wrong option.

There is an employer's contribution too but this isn't stated on the payslip. Since it's a defined benefit scheme there is no individual valuation of the pension fund so I don't see a total of what is paid in.

Personally I would put the larger number. 2555 is an income exclusion. The larger number is then is your gross salary as it is income. You have just elected to portion some of that amount into a pension scheme. But it is still earned income. As you are doing a 2555 rather than 1116 for this income it should not matter that you were not taxed on this.

What you might want to consider 8833 treaty declaration for is the employer's matched contributions. You probably would not include that on 2555 as it could be seen as a benefit rather than earned. People differ on this idea though. Personally, I'm stating on an 8833 my employer contributions and claiming the us-uk tax treaty position that this should not be subject to us tax.

These are only my opinions and I am not a qualified tax advisor or accountant.

J

I'm not sure how that works in practice.

I want to claim the FEIE for all of my salary but not sure whether to declare the higher or lower figure. This may be slightly academic as my salary is low enough that it should all fall within the FEIE limit regardless of whether I pick the adjusted or unadjusted gross. I just don't want to pick the wrong option.

There is an employer's contribution too but this isn't stated on the payslip. Since it's a defined benefit scheme there is no individual valuation of the pension fund so I don't see a total of what is paid in.

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You can include your contribution for the FEIE total, but not your employer's. However, any contribution that your employer makes towards your pension is taxable so you can use FTCs, the treaty or maybe deductions and exemptions to deal with the tax due.

May I add some observations about the salary sacrifice question?

The basis of an effective salary sacrifice in the UK is that the employment contract recognises that the reduced salary is the amended contractual amount. Viewed in this light, the reduced salary is the amount which is then taxed in the UK. The previous higher salary amount is then simply a part of a calculation of the reduced salary, with no relevance for UK tax.

I cannot comment on US tax other than to suggest that it would be surprising if it did not also have regard to the reduced contractual amount.