In November 2004 the treasury gave the green light to salary sacrifice.
Employees can make tax and National Insurance savings between 31% and 51% on all our products, the value and impact of your benefits scheme is massively increased whilst improving the employees and companies finances.
Employees are given the opportunity to make decisions on their own reward package, maximising tax and NI efficiencies that provide a direct positive impact on their net income. Please see our services page for comprehensive information around each of our products.
Employers Save Money
For the employer, some of the possible benefits to implementing a salary sacrifice scheme are significant savings in NIC to the organisation. These savings can potentially be reinvested into your benefits programme.
Employees Save Money
Salary sacrifice schemes always offer employees the opportunity to model their benefits package to suite their individual needs. Every BBM Wellness product has the potential for staff to benefit from tax and NIC savings.
How can BBM Wellness help?
We have the knowledge to advise you on how to implement a salary sacrifice scheme, and make the whole process effortless. Our consultants will liaise with your HR and payroll departments providing all necessary paperwork to ensure that any changes comply with all tax and employment law and regulations. A one off adjustment to employees salary is all that's required for our salary sacrifice programmes to run for twelve months.
What is salary sacrifice?
A salary sacrifice scheme allows employees to give up the right to part of their salary due under their terms & conditions of employment in return for an employer’s agreement to provide the employee with a non-cash type benefit.
What benefits can be included in a salary sacrifice scheme?
Although there are some benefits that have additional tax advantages for employee and/or employer (see tax and National Insurance efficient benefits) just about any benefit can be offered as part of a salary sacrifice scheme.
What are the benefits for an employee?
A salary sacrifice scheme means that an employee will save on National Insurance on the full amount sacrificed (except in the case of childcare vouchers where employees save NI on the first £243 per month), as benefits in kind do not suffer the same levels of National Insurance as salary. Although Class 1A NIC is payable by the employer on most benefits they do not currently attract Employee Class 1A NIC. Therefore the employee can save up to 11% National Insurance. The actual savings depend on factors such as whether the employee is contracted-out or not as well as whether they earn above the upper earnings level.
What are the benefits for an employer?
The employer also benefits, as they are perceived to have added value to an employee’s reward package. If the benefits that are included involve those that have additional Employer NI advantages/tax advantages then there are additional employer financial benefits.
What are the main criteria/conditions?
The potential future remuneration must be forfeited BEFORE it is treated for tax or National Insurance purposes and cannot be applied retrospectively. (In the case of bonuses, for example, they must be sacrificed before they have been earned, although that can happen after the amount of the bonus is already known. Depending on the tax office this can also apply to pay rises).It must represent a true, revised contractual arrangement (constitute an enforceable variation of the employee’s right to remuneration) rather than an arrangement whereby an employee asks an employer to apply part of their cash remuneration on their behalf.The employee must accept they are freely giving up remuneration without any ‘quid pro quo’. They therefore cannot insist in the agreement that the employer contributes to a benefit, even if that is the basis of the arrangement, so trust is essential. HM Revenue and Customs recognises that the sacrifice is made in the hope the corresponding amount is paid by the employer to a benefit, but it cannot be a legal requirement for the scheme. All agreements must then be signed and dated as a formal record of the position.