Save substantial amounts on your Class 1 NI contributions while your employees save on their Tax and NI
The usual way of rewarding employees is through their wages. They work for you, and you pay them a gross wage which is then subject to Tax and NI charge, leaving a net wage.
The employees spend what money they have left after Tax and NI on whatever they like.
Increasingly, employers are wanted to enhance the lives of their employees, a consequence of which is usually a more profitable business and happier business environment.
One way of bringing the benefit to your employees is using a mechanism called a salary sacrifice.
Salary sacrifices are normally for an agreed amount over an agreed period** and involves a variation to the employee contract, in writing
It really means what it says, the employee gives up part of their gross salary to receive a particular benefit that then does not attract Tax and/or NI charge.
The business quite often makes substantial Class 1 NI savings as well
For example an employee on the Workplace Nursery Scheme pays £1000 a month for their childcare at a nursery
They would save Tax and NI on the whole nursery fee which would give them a saving of £245 a month!
This provides the company an NI saving of £53 per month!
* Please note that savings are determined by the the type of benefit and the Tax and NI rates of the employee
** If an employee leaves your employment before the agreed term of payments is completed, a final salary settlement will be required.
Attract and retain the best employees…
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Not sure how to implement salary sacrifice schemes? They are really easy to start and are great value for you and your employees
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