A salary sacrifice scheme lets employees swap cash salary for non-cash benefits, saving tax and National Insurance. But earnings must not fall below the National Minimum Wage, and life events may impact eligibility. Learn how to navigate these rules.
If an employee wants to join or leave a salary sacrifice arrangement, the employer must update their contract to clearly reflect the changes in cash and non-cash entitlements. Additionally, significant life events—such as marriage, divorce, a partner's redundancy, or pregnancy—may require adjustments to the arrangement, providing employees the option to opt in or out.
Certain benefits are currently exempt from Income Tax or National Insurance contributions and do not need to be reported to HMRC. These include:
- Contributions to pension schemes
- Employer-provided pension advice
- Workplace nurseries
- Childcare vouchers and employer-provided childcare contracted before 4 October 2018
- Bicycles and cycling safety equipment (including cycle to work schemes)
In some cases, for example, when a salary is exchanged for an employer contribution to a pension scheme, the reduction in salary may also reduce the employer's National Insurance contributions liability.
by Admin
Share
STAY IN THE LOOP
Subscribe to our free newsletter.
When a couple divorces or separates, they need to agree how their finances will be divided. This can include property, pensions, savings, investments and maintenance payments. Where possible, reaching
Pensioners who do not want to receive the Winter Fuel Payment for winter 2026-27 have until September to opt out. The payment will be recovered through the tax system from those whose total income
The tax treatment of some crypto assets is set to change under draft legislation for Finance Bill 2026-27. The proposed changes include new rules for qualifying stablecoins, crypto asset loans and
Businesses in the vaping sector are reminded that the new Vaping Products Duty and the Vaping Duty Stamps Scheme will take effect from 1 October 2026. HMRC is urging manufacturers, importers,