Salary Sacrifice
Salary sacrifice provides an opportunity for employers to make savings and for staff to boost their pension payments.
Salary sacrifice occurs when employees give up part of their salary in return for a non-cash perk of equal value. The benefit of doing this would be that tax and National Insurance Contributions (NIC) would no longer be paid on the salary that has been sacrificed.
Pension payments could be increased by up to approximately 30% at no financial cost for basic rate tax paying employees
Some of the most popular salary sacrifice benefits include:
- Employee Pension Contributions
- Life Assurance
- Childcare Vouchers
- Staff Canteen Cards
- Mobile Phones
- At or near work Car Parking
- Work Related Training
- Professional Subscriptions
- Cycle to work
Salary sacrifice can be offered as a stand-alone option alternatively companies can use the savings achieved to launch a flexible benefits package.
As the fine detail of salary sacrifice is complicated it is essential to obtain good advice in the first place. Communication needs to be clear and concise with individuals having sufficient information to make appropriate decisions in respect of their own benefits.