Salary sacrifice has become an essential cost saving tool for employers given the rise in the National Insurance (NI) rate from 13.8% to 15%.
By allowing employees to divert part of their salary into their workplace pension, employers reduce the salary on which they pay NI. This is an effective way to manage payroll costs while also demonstrating a commitment to employee financial well-being.
Salary sacrifice, also known as salary exchange, lets employees redirect a portion of their pre-tax salary to non-cash benefits, such as pensions. With this arrangement, employers save on NI contributions as the sacrificed portion is no longer subject to NI. This also reduces employees’ taxable salary, allowing them to save on NI contributions and potentially increase their pension savings.
With the upcoming NI increase, salary sacrifice provides a timely solution for businesses to manage increased NI costs while offering employees a tax-efficient way to grow their pensions. For more information about how to implement salary sacrifice contact the team at EBCam on info@ebcam.co.uk.