With the upcoming rise in Employers National Insurance in April, salary sacrifice schemes are poised to become increasingly attractive for employers. However, these schemes come with hidden complexities that need careful consideration.
Below we explore the pros and cons of salary sacrifice:
Pros:
- Starting in April, employers can save up to £15 for every £100 through salary sacrifice schemes.
- Employees, especially higher-rate taxpayers, can also benefit from significant savings.
Cons:
- Beware of numerous ‘scam’ schemes that promise unlawful savings.
- Risks include issues with National Minimum Wage, taxation, and maternity discrimination.
- Salary sacrifice is often misunderstood as a simple deduction from pay.
- Employers need to carefully consider the contractual basis of the sacrifice for it to be effective.
If you have any questions or need further assistance, feel free to reach out to the PALS team.
