By Paul Tew
Salary sacrifice is not a tax avoidance scheme; rather the term represents a change to an employee’s terms and conditions under the employment contract. Salary-sacrifice schemes are set up with the primary aim of converting cash pay that is subject to tax and Class 1 national insurance contributions to a non-cash benefit that has a different tax or national insurance treatment, thereby making a potential tax (employee only) and national insurance (employee and employer) saving. The sacrifice is achieved by varying the employee’s terms and conditions of employment relating to pay.
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- Changes to the rules on salary-sacrifice
- What is an effective salary-sacrifice arrangement?
- Varying the employment contract
- Reference or notional salary
- The role of HMRC
- Implementation
- Changing the terms of an arrangement
- Drawbacks of salary sacrifice
- Statutory payments
- Tax credits
- State pension
- Other benefits
- Workplace pensions
- The national minimum wage
- Delivery and review of salary-sacrifice benefits
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About the author
Paul Tew
Paul Tew is a freelance writer, lecturer and consultant. He has contributed to a number of key reference works aimed at the HR/payroll profession, as well as writing articles for both the national and the payroll press. Paul has an extensive background in running, converting and installing HR/payroll systems for all sizes of employer within the public and private sectors. He has, in recent years, specialised in PAYE and NIC compliance issues.
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