What’s salary sacrifice?30 March 2020
Salary sacrifice allows you to give up some of your gross salary and for the tax and National Insurance (NI) and, if applicable, income tax savings made to be used to either help increase the pension contributions being paid or for your take-home pay to be increased. This is done at no additional cost to you or your employer.
Salary sacrifice may not be suitable or may only have a minimal benefit for employees with low earnings. HM Revenue & Customs guidance also states that a salary sacrifice arrangement must not reduce an employee's cash earnings below National Minimum Wage rates.
The examples below show you how this works.
- These examples are based on our understanding of current taxation law and HM Revenue & Customs practice, which may change.
- The amounts shown are only examples and aren’t guaranteed.
- The value of any tax relief will depend on individual circumstances.