Jargon Buster: Salary sacrifice

There are benefits to 'salary sacrifice' schemes.

by MT Staff

In recent years, employees have often been asked to defer pay rises or reduce holidays in order to safeguard their jobs, so when they hear about so-called 'salary sacrifice' schemes emanating from HR, who can blame them for imagining a further shrinking paypacket?

For once, that's not the case. Salary sacrifice arrangements can actually put more cash into the hands of employees and employers.

Salary sacrifice schemes are a means of providing government-approved perks, free of tax and national insurance. Childcare vouchers or cycle-to-work schemes can be paid for out of gross pay, saving employees tax and national insurance contributions on the value of the benefit.

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