Government Changes To Salary Sacrifice
Unfortunately it appears the days of salary sacrifice are coming to an end. The scheme is estimated to have cost the government as much as £5 billion a year. In the Autumn statement the chancellor Phillip Hammond announced that they are curtailing the salary sacrifice perks with the exception of employer pension contributions, employer-supported childcare and the cycle to work scheme.
This means the salary sacrifice scheme will no longer be beneficial to workers taking out smartphone contracts, buying a car, taking out private medical insurance or buying TV’s and white goods.
HMRC has recently released its consultation document and said that the changes would most likely be part of the Finance bill 2017.
Curtesy of the Money Advice Service: Salary sacrifice is when you agree to exchange part of your salary for extra benefits from your employer. Benefits offered can include child care vouchers, a company car oradditional pension contributions.
Many organisations offer salary sacrifice schemes. The benefits are clear – you pay less tax and you have a wider choice of benefits including:
- Company cars
- Child care vouchers
- Work related training
- The cycle to work scheme
- Car parking near your workplace
- Additional pension contributions
Things To Consider
Sacrificing part of your salary means you will earn less. This can affect things like your maternity pay or mortgage applications. It can also affect your state pension contributions or the amount you receive in benefits and your life insurance contributions and payouts.
How Does Salary Sacrifice Save Your Employer Money
Your employer will save money by offering salary sacrifice because the company will not pay National Insurance Contributions on the amount of salary you give up.