As businesses prepare for an increase in employers' national insurance contributions (NIC) beginning on the 6th of April next year, it is crucial they explore strategies to alleviate the burden of these additional costs ...
Embracing salary sacrifice is not merely a reactionary measure!
A strategic approach involves the utilisation of salary sacrifice schemes, which can offset the financial ramifications of heightened NIC. Salary sacrifice is a fundraising strategy whereby employees agree to give up a portion of their salary in exchange for non-cash benefits, such as enhanced pension contributions or increased annual leave.
This arrangement not only benefits employees by providing tax-efficient options, but also assists employers in managing their costs more effectively!
As NICs will rise alongside a reduction in the threshold for liability - dropping from £9,100 to £5,000 - it becomes ever more pertinent to consider how salary sacrifice can mitigate the impact of these changes.
The threshold reduction alone could cost employers an additional £615 per employee annually so by implementing a salary sacrifice scheme, businesses can temper these expenses.
When employees opt for salary sacrifice to increase their pension contributions, the lowered salary results in lower NIC liabilities for the employer. Specifically, contributions made through salary sacrifice are deducted from an employee's gross pay, effectively reducing the total amount subject to National Insurance.
"Salary sacrifice arrangements encourage savings and investment among employees!"
By reallocating salary towards pension contributions, employees not only benefit from immediate tax relief, but also promote long-term financial security. As such, the pronounced benefits of salary sacrifice align the interests of both employers and employees, making it a strategic tool in these financially trying times.
Employers can further extend salary sacrifice schemes to include a variety of benefits ranging from childcare vouchers to cycle-to-work schemes. The versatility of salary sacrifice in promoting benefit uptake bolsters employee satisfaction and loyalty while providing potential cost savings. This holistic approach ensures that companies are not merely reacting to the NIC increase, but are proactively managing their workforce costs.
"As the date of NIC adjustments approaches, the implementation of salary sacrifice schemes is emerging as an invaluable strategy!"
By effectively leveraging the synergy between employee benefits and cost management, companies can not only offset the impending increases in National Insurance, but also foster a more engaged and satisfied workforce.
Embracing salary sacrifice is not merely a reactionary measure.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about salary sacrifice for your employees, it may be a great idea to give me a call on 01908 774323 and let's see how I can help.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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