Reward | Adding value to your staff benefits at zero cost

If you’re under pressure to reduce budgets from your colleagues in finance then you’re not alone. Organisations across the board are looking at ways to save money to cover the ever-increasing rise in operational expenditure.

Although it might be an easy place to start, your staff rewards packages don’t have to suffer the consequences of shrinking budgets. In fact, some staff benefits actually create meaningful savings particularly those utilising the salary sacrifice mechanism.

How does salary sacrifice work?

Salary sacrifice is an agreement whereby an employee agrees to give up part of their cash renumeration package in exchange for a non-cash benefit of the same value for a defined period. This reduces their taxable income making them savings equivalent to their personal tax band (28%, 42% or 47%).

As a result, the organisation’s gross salary bill is reduced thereby decreasing the amount subject to Employer’s National Insurance Contributions (and possibly employer pension contributions) thus saving employers 15% on the cost of the non-cash benefit.