Tax and National Insurance FAQs

1. How much tax and NI will I save by putting my Thanks A Million payment into the O2 Pension Plan?

This will depend on your tax status. The table below outlines how much you can save if you are entitled to the full £1,000 Thanks A Million payment:

Approximate Earnings per annum	Your tax and NI savings %	Your tax and NI savings ££s
Less than £5,500	Nil	Nil
£5,500 to £40,000	33%	£330
Greater than £40,000	41%	£410

Section 2 and 3 members (in the defined benefit or 'final salary' part of the Plan) pay a reduced rate of NI so for them the savings would be 1.6% less than shown above.

The figures above will vary depending upon your personal tax position and are intended as an illustration only.

2. But don't I need to pay my NI to qualify for some state benefits?

Yes you do but your state benefits will be as though you had not received this payment. This is because the payment is treated as a contribution by O2 straight into the O2 Plan, so the money is never yours to pay NI on.

Benefits such as Job Seekers Allowance, Statutory Sick Pay, Incapacity Pay and your State Pension can be affected. If you earn less than £5,460 then you may miss out on some of the benefits above. If you are a member of Section 2 or 3 of the O2 Plan (the defined benefit or 'final salary' part of the Plan) or earn more than the Upper Earnings Limit (approximately £40,040), then your State Pension will not be affected. More guidance can be found here.

3. Why isn’t my Thanks A Million payment tax free anyway?

The Thanks A Million payment is a payment in cash and therefore is subject to tax and NI in the same way as salary, bonuses, overtime payments, etc.