Only 41% of smaller enterprises offer Salary Sacrifice. It is a simple way to trim tax while helping employees keep more of what they earn…
What is salary sacrifice?
Salary sacrifice is a government-backed scheme to help employers and their workers save on tax by paying into a workplace pension. An employee effectively ‘swaps’ part of their salary for another benefit, in this case, pension contributions.
The employee agrees to give up a small part of their earnings, reducing their overall salary. These ‘sacrificed’ earnings are then added directly into their workplace pension, ready for their retirement.
How does it work?
When an employee agrees to take part in a salary sacrifice scheme, they essentially agree to use a small part of their monthly pay for their pension. Rather than paying a part of their earnings into their pension every month, they get paid less on the agreement that any money they sacrifice goes straight into their pension instead.
They are reducing their monthly take-home pay now in exchange for more money in their pension for the future. The benefit of doing this is that by reducing the money they receive right now, they owe less tax and get to keep more of what they earn overall.
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