Gain benefits and save money at the same time
Salary sacrifice benefits are useful schemes that can save money for both employers and employees. While a salary cut can be scary, it is important to think about the possible benefits it can bring.
Salary sacrifice benefits are a choice made by an employer and employee. The employee agrees to lower their salary. In exchange, they receive goods or services. Possible benefits you might be offered are:
Your employer must make sure that the amount taken from your salary matches the benefit you get. Your salary cannot go below the national minimum wage.
It may seem like there is no benefit to getting something that costs the same as a salary deduction. However, you can save on income tax and National Insurance. This is because the money comes from your pre-tax salary.
You can also spread the cost of big purchases like cars or technology over time. This means you do not have to pay a large amount all at once. Also, employee benefits can be used for both personal and business use, and gym memberships and Cycle to Work schemes can help to implement good lifestyle and health habits.
When deciding if opting into a benefit scheme is right for you, there are some important things to consider.
Some benefits require you to pay Benefit In Kind (BIK) tax, such as for gym memberships, car maintenance schemes, and tech schemes. In some cases, you might pay more in BIK tax than in income tax and National Insurance. So, check to ensure you are getting the best deal.
While there is no limit to the amount that can be deducted from your salary as long as it remains above minimum wage, you can only put £40,000 total into your pension savings annually.
Lastly, taking a salary reduction may have an influence on credit or mortgage applications, or impact your entitlement to other benefits like statutory sick pay or redundancy pay.
It’s important to consider the pros and cons when opting in to a salary sacrifice scheme. However, they can often be a great opportunity to gain benefits and save money at the same time.
At ACS Staffing Solutions, we can help you find jobs that have salary sacrifice benefits that suit you. Call 01604 704058 or email info@acsrecruitment.co.uk to learn more.
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