Salary Sacrifice on the surface may not sound all that beneficial. The word ‘Sacrifice’ brings ideas of hard earned money being taken from employees with each paycheck. But in reality, it can be a great opportunity for colleagues to gain access to services that they may not have been able to afford, all while being eligible to pay less tax. It’s time to dive into the world of salary sacrifice schemes and understand that they’re not as scary as they sound.
What are the benefits?
Salary Sacrifice schemes are becoming more and more popular within businesses. According to recent statistics, 70% of UK pension schemes use it as the default method of making contributions.
So, what are these schemes?
Salary sacrifice is an agreement made by the employee to exchange a portion of their salary for a non-cash benefit. This exchange then decreases their annual pre-tax salary, and the money ‘sacrificed’ is moved to fund their benefits offered by their company. In this way, employees can save each year by reducing their national insurance contributions, and hold onto more of their earnings; all the while cutting their tax and contributing to a scheme that will improve their lives in the long term.
For businesses, it’s a practical way to offer assistance for employees, without taking a large hit to the company’s pockets. If your workers are looking at new cars, bicycles or even planning for their retirement and worrying about the cost; this is the smartest and most economical way to achieve those goals.
Get to know your options
Cycle to Work schemes are a great way to purchase a new bike, without having to pay out all in one go. It works by having an employee pay back their employer for their bike over an agreed period of time. Stretching out the cost in this way helps relieve the stress of paying a large price all in one go, making their paychecks go that bit further.
On yer bike!
Along with the monetary benefit, cycling is great for worker’s mental and physical health. Riding a bike to and from work can help reduce anxiety and improve overall fitness. Getting away from sitting in that rush hour traffic can help reduce commutes, giving your people more free time to prepare themselves for the day, or get back home to do what they love.
Motoring towards savings
If their commute is longer, there are Salary Sacrifice options for cars. If an employee’s car is in need of an upgrade, or they are looking for something more fuel efficient, taking on one of these schemes can be very economical. The cost of new cars has increased up to five times more than wages have in the last decade. Salary Sacrifice Car schemes may not be able to solve this crisis, but they can help make that new car dream more affordable, and the schemes can be more flexible compared to some finance and loans on offer.
Join the EV revolution
Maybe it’s time to look at the latest technology, and get ahead in sustainable living. Electric Car salary Sacrifice schemes can help employees prepare for the future efficiently and without costing the earth. As we move closer to the phasing out of conventional cars in 2030, signing up to a Electric Car scheme can help give peace of mind that employees are not only ready for the new era in motoring, but also that they are doing their bit to protect the environment. Not to mention the road tax breaks received with an all electric car!
So, stop looking at the word ‘sacrifice’ in the wrong way, and start viewing it as an opportunity. It’s a hard time for businesses, the cost of living crisis and economic uncertainty has left everyone feeling the pinch. Offering a salary sacrifice scheme is a cost effective way to secure your businesses finances, all the while helping your employees and strengthening staff retention.