Thomas Carroll Independent Financial Advisers offer expert advice on Salary Exchange how it can be used to enhance your employee benefit package.
Many organisations are now offering their employees salary exchange, also known as sacrifice schemes. The idea behind this is quite simple. An employee agrees to give up part of his or her salary and, in return, the employer provides a non-cash benefit that is ideally exempt from tax and National Insurance.
Once salary exchange is exchanged, the employee’s salary has reduced so they pay less tax and National Insurance. In addition, the employer will not have to pay Employers’ National Insurance contributions on the salary that has been exchanged. This saving can be used to increase net pay, improve benefits or retained by the employer to reduce the cost of providing benefits.
Salary exchange schemes only work if the benefits involved are tax-free so most commonly these schemes involve childcare vouchers or pension contributions. However, arrangements are also possible for company cars, cycle-to-work schemes, parking at or near the workplace, and work-related training.
Pension auto-enrolment should make salary exchange even more popular as the cost savings could be applied to meeting the costs of implementing and administering an auto-enrolment scheme. HMRC has recently relaxed some salary exchange rules to ensure that salary exchange schemes can operate in the new auto-enrolment environment.
We would be delighted to review your current arrangements and discuss how Salary Exchange can be used to enhance your employee benefit package. Whatever the nature of the review, as a Chartered Financial Adviser, you can be assured that we will provide a solution that is based entirely on your needs.