Overview

• Salary sacrifice lets employees divert part of their salary into pensions, cutting their income tax bill and employee National Insurance contributions.
• Employers benefit from reduced National Insurance costs when staff use salary sacrifice for pension contributions.
• A parent earning £110,000 who sacrifices £10,000 can lower taxable income to preserve the personal allowance and save about £6,200 in tax and NI.
• Sacrificing £5,000 of salary can drop a £65,000 earner’s adjusted income below the £60,000 threshold, avoiding up to £562 in child benefit charges.
• HMRC’s ongoing review of salary sacrifice schemes could tighten rules, prompting advisers to recommend early participation.