Salary Sacrifice Hints and Tips

Salary Sacrifice Hints and Tips

In the previous issue of Connection we carried the second instalment of hints and tips for NICs efficiency. This month we take a look at the third and final instalment of advice around salary sacrifice.

Did you know?

You could save your employees a considerable proportion of their original private arrangement costs by arranging a salary sacrifice in exchange for parking at or near your workplace. Our example: a £1000 annual season ticket would, with tax and NICs advantages, potentially save an employee between £330 & £410 - with your company saving £128.

More Hints and Tips

These flexible benefits attract no tax or NICs liabilities:

• Charitable donations by employees are currently tax-free but do not reduce the employee's NICs liability. However, an agreement with the employer to take a cut in pay, so that the charity receives an alternate employer donation, could see the arrangement provide an advantage to the employee both in tax and NICs on the equivalent amount - making charitable donations even more beneficial.
• Arrangements could also be agreed where incidental overnight expenses are paid free of tax and NICs instead of standard cash remuneration. This would need to take place under revised contractual arrangements for qualifying employees
• Arrangement to provide Sports facilities
• The provision of free or subsidised meals. This is increasing in popularity with salary sacrifice to provide non-cash entitlement cards to employees who can then spend credits or points on food and catering in the workplace, thus saving the employee between 33% & 41% of the normal costs, and the employer 12.8%
• Although limited as a benefit with the allowed amounts not increasing for some considerable time, Luncheon Vouchers continue to offer savings to employees and employers
• Where employers presently do not cover the payment of professional fees (from the HMRC-approved list), arrangement can be made to sacrifice the membership fees amounts which are then fully paid by the employer.
• HMRC are increasingly monitoring the use of Employee Car Ownership Schemes (ECOS) and presently a consultation is underway in relation to the mileage payments made to employees for the use of their private vehicles. Currently by constructing arrangements to take full advantage of the 40p per mile for the first 10,000 miles and 25p thereafter, when appropriately offset against car allowance or private leasing arrangements, the employee and employer are advantaged under the AMAP arrangements by the savings in tax and NICs
• Optional training courses selected by employees extending the knowledge and skills can potentially be taken advantage of under Learning Development

Found these tips handy?

Specialist flexible benefits providers like Ceridian are ideally placed to use their expertise to enable employers and employees to take full advantage of the loopholes that apply to benefit provision.

Contact us for more information on flexible benefits.