What is a salary sacrifice scheme?

Salary sacrifice is when you agree to exchange part of your salary so you can get extra benefits from your employer.

Benefits offered can include child care vouchers, a company car and additional pension contributions.

But is it worth it?

Read on to see the pros and cons of salary sacrifice.

How the salary sacrifice scheme works

These days a lot of organisations offer salary sacrifice schemes.

The idea is simple enough. You give up part of your salary and, in return, your employer gives you a non-cash benefit, like child-care vouchers, or bigger pension contributions.

Once you take a salary sacrifice, your overall pay is lower, so you pay less tax and less National Insurance.

Also, your employer won’t have to pay their Employers’ National Insurance contributions on the part you sacrifice.

Some employers pass on some or all of these savings to you.

Examples of salary sacrifice benefits

Salary sacrifice schemes only really work for you and your employer if the benefits are tax-free.

These can include:

  • Company cars
  • Childcare vouchers
  • Work-related training
  • Cycle to work schemes
  • Car parking near your workplace
  • Additional employer pension contributions

Want to find out more about Salary Sacrifice?

The HMRC website features a great article about Salary Sacrifice. Check it out now.

Learn more about Salary Sacrifice

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Want to see how salary sacrifice may affect your take home salary?


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