Whilst increased NI contributions are an additional financial outgoing, those enrolled on salary sacrifice schemes will benefit from an increase in savings for the product that they receive.
Higher NI contributions result in larger savings for those obtaining tax and NI relief on salary sacrifice schemes.
In addition, as an employer, you will save the increased percentage of 15.05% in NI contributions for each member on a salary sacrifice scheme (please see figure 1 below).
Figure 1: Approximate savings for a basic rate tax payer enrolled in a salary sacrifice scheme; based on £243 monthly childcare voucher order and a £750 cycle (spread over 12 months) respectively.
| Previous annual savings for an employee | Upcoming/New annual savings for an employee | Annual NI savings for employer, for one employee | |
|---|---|---|---|
| Childcare Voucher Scheme | £933.24 | £969.60 | £438.86 |
| Cycle to Work Scheme | £240.00 | £249.38 | £112.88 |
What about those who are not enrolled in salary sacrifice schemes?
The increase in NI contribution will likely mean that they receive less money in their pay. Couple this with increased energy prices and the rising cost of living, and you may find that employees could benefit from financial support.
What can you do to help?
The employee benefits that you provide can help your employees’ salary stretch further. For example salary sacrifice schemes, shopping discounts at both supermarkets and high street stores, and a technology scheme to help with Christmas shopping (or as an emergency white goods purchase scheme). We suggest reviewing your current benefit offering.
We also suggest carrying out some internal research to ask employees’ what they feel they might need, as well as researching what benefit schemes (including salary sacrifice) are available on the market.
Consulting with a service provider about what schemes you have/would like to implement may help you to maximise savings for your employees, as well as yourselves. For example most cycle to work schemes can be provided free of charge, but you would still generate NI savings (for your employees and yourselves).
Employees may also benefit from financial education, dedicated financial advice phone lines and useful tools like budgeting trackers, as well as financially related discounts such as cashback on insurances. Educating your employees and providing support can help them to make better financial decisions.
Supporting employees through your benefit package can help attract, retain and look after talent; boosting morale throughout your organisation and help to keep employees happy and productive.
Providing a benefits package, large or small, needn’t cost the Earth. Salary sacrifice schemes can often generate savings for you as an organisation, which can be used to help offset the cost of using an employee benefit provider.
For more information please contact us.