Employers can make car leasing, bicycle leasing and more available to employees through salary sacrifice. Employees in the United Kingdom save nearly £5 billion in tax contributions each year through salary sacrifice. These savings alone make salary sacrifice schemes a worthwhile inclusion in any employee benefits programme.
In this blog post we’ll discuss some of the most popular salary sacrifice schemes that you could implement for your employees.
What are Salary Sacrifice Schemes?
Through salary sacrifice, employees sacrifice a portion of their wage in exchange for a non-cash benefit, such as a vehicle lease or childcare vouchers. Employees save on NI contributions through these schemes, as the portion of salary that is sacrificed does not count towards the employee’s total taxable income.
These schemes are also popular as:
- Products and services available through salary sacrifice schemes are often offered at a significant discount.
- Employees can spread the cost of the benefit over a long period of time (usually 12 months) instead of paying in one lump sum.
Employees can save up to £933 each year.
Childcare vouchers are one of the most popular salary sacrifice schemes available. It’s a simple scheme to implement, experiences high adoption rates and the benefits are greatly appreciated by employees.
Under this scheme, employees purchase vouchers which can be used to pay for approved childcare services for children up to 15 years old. There are a range of approved providers including nurseries, playgroups, nannies, childminders and au pairs. The vouchers can also be used to pay for some tuition services.
Many employers offer this scheme to provide more benefits to staff with children, creating a more family-friendly culture that will help attract talent back to the organisation after maternity leave.
Employers can save up to £275 per employee each year.
Employees can save up to £90 each month.
Under a car leasing scheme, your employees can lease a brand new car for their personal use, without the need for a loan or a large outlay of capital. It’s also an effective option for employers that need internal fleets or who provide a personal vehicle to staff as part of their benefits package.
As the employee is leasing the car — not buying it outright — many of the costs associated with vehicle ownership are covered by the salary sacrifice provider. Most providers will take care of all and servicing, maintenance (including tyre replacement) and will provide breakdown cover and comprehensive insurance coverage.
Cycle to Work
Employers can save up to £96 per employee each year.
Employees can save up to 42% off the cost of equipment.
Under the Cycle to Work scheme, employees can lease bicycles and cycling equipment at a discounted rate. Equipment available under the scheme can include:
- Cycling clothing
- Locks and chains
- Shoes and pedals
- Bike lights and reflectors
- Tools and maintenance
By offering this scheme, you can encourage employees to improve their health and environmental credentials. It’s also effective in reducing congestion on the roads and alleviating pressure on office parking allocations.
Employers can save up to 7%.
Employees can save up to 20% off the cost of equipment.
Home Technology schemes enable employees to purchase all the technology they could want for their home at discounted rates. Employees can pay for laptops, PCs, tablets, smart TVs and more through small, regular contributions taken directly from their salary, usually over a 24 to 36 month period.
Many providers also include extended warranties and improved antivirus protection as standard to ensure employees get the most value from their new equipment.
The scheme is increasingly popular with employees who would like the option to work from home but need a convenient, affordable option to upgrade the technology in their home office to make the transition feasible.
Employees can save up to 30%.
Many employers are providing access to Healthcare Screening schemes so employees have a low-cost option to assess their general health. These schemes are particularly popular in workplaces where employee health and wellbeing is a priority, and they can be integrated with existing healthcare arrangements.
Screenings are available to cover general health or specific health issues, including:
- Over 50’s health
- Cancer screening
- Heart health
- Male health issues
- Female health issues.
Under the scheme, the screening costs are drastically reduced and payments are made over a twelve month period.
These are five of the most popular salary sacrifice schemes that our clients often request as part of their voluntary benefits package. There are other schemes available that cover pension contributions, dental insurance, private medical insurance, mobile phone technology and more. We expect these schemes to continue to grow in popularity as they’re easy to implement, inexpensive, and provide significant benefits to employees.