Salary Sacrifice is a tax efficient agreement between employer and employee where the employee agrees to give up an amount of their future earnings in exchange for that amount to be paid into a Workplace or Personal Pension scheme.
The employer can contribute additional money to this due to the savings they are making in their National Insurance contributions.
Employee benefits from increased contributions
Employer does not incur any increased cost
Income Tax and National Insurance Savings for the employee
It is important that your employees understand the potential drawbacks, as the salary is being sacrificed so any transactions that are based on amount of salary may be affected, such as income requirements for a mortgage.
Salary Sacrifice enables employers to enhance their employees remuneration package at no additional costs to the business other than the initial administration costs to set up the regular payments.