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In a salary sacrifice scheme, an employee agrees to reduce their gross salary in exchange for a non-cash benefit such as an electric car lease, bike, purchase of additional days holiday or other benefit.
How does it provide a tax benefit?
Because the deduction is made before tax and National Insurance (NI) contributions are calculated, both the employee and the employer can benefit from tax savings.
● Reduced Income Tax : By reducing their gross salary, the employee's taxable income is lower. This means they pay less income tax each month.
● Reduced National Insurance Contributions: Similarly, with a lower gross salary, the employee pays less in National Insurance contributions.
● Overall Savings: The combined savings on income tax and National Insurance can significantly reduce the net cost of leasing an EV through a salary sacrifice scheme, making it much more affordable.
Reduced National Insurance Contributions: Employers also pay National Insurance contributions on their employees' salaries. When an employee participates in a salary sacrifice scheme, the employer's NI contributions are reduced as the employee's gross salary is lower. This can lead to cost savings for the business.
My Staff Shop and their carefully selected Partners make managing your Salary Sacrifice Schemes simple. Our partner Portal allows you to view and approve applications, while our partners reduce your admin burden by dealing with the processing and paperwork. Our experts will guide you every step of the way making this the simplest, most streamlined process possible, whatever the size of your business.
From everyday purchases, fuel, eating out, entertainment, gym and holidays, employee savings using the My Staff Shop Platform can be over £1000 a year - that’s less than 2% of the cost of a pay rise. You can offer your employees relevant, useful and impactful savings that can really stretch their paypackets.
If you are an employee and have a query about your account, gift cards, orders or anything else. Please contact us Here