An Introduction to Salary Sacrifice.

Salary Exchange, also known as Salary Sacrifice, is a hot topic at The Ink Group at the moment, as it can be used as an effective tool for businesses to reduce their overall National Insurance liability. This is partly in response to the increased employer National Insurance contributions effective from April. It's not something that everyone knows about, so, here's a quick run down.

The principle behind salary sacrifice is simple. Employees agree to redirect part of their gross salary into a ‘non-cash’ benefit, most commonly as extra employer contributions into their pension pot. However, it can also be applied to the cycle to work scheme, childcare, electric vehicles and holiday purchase.

It can lead to substantial savings on tax and national insurance contributions for employers and employees. Plus it enhances your employee benefits and the cost savings can be used to reinvest in the business or enhance benefits further.

If a company with 20 employees, each earning an average salary of £30,000, implemented Salary Exchange in their pension scheme paying 5% employer and employee contributions, they'd save over £4,000 in year 1 in National Insurance contributions.

If you'd like to find out more contact us at benefits@theinkgroup.co.uk.