Michael Lansdell explains how you can give your staff a pay rise, by using salary sacrifice.
If you’re a business owner – and if you didn’t know this already – this past year would have shown you that your staff are your greatest asset. The backbone of every thriving business is a talented, cohesive and motivated team and also one that knows its value – and is remunerated as such.
But did you know that there is a cost-free way to give your staff a pay rise, by using salary sacrifice?
The tax-saving advantages of some salary sacrifice schemes came to an end last April, but an employee can still sacrifice some of their salary in exchange for their employer paying into a pension scheme. There may be no tax advantage, but both employee and employer can reduce their NICs. If you’re an employer, whether you’re paying into a workplace or personal pension plan, you will essentially be offering your worker(s) a pay rise, in the form of pension contributions, at no cost to yourself.
Worth taking advantage of?
For an employee who is at, or just under, the upper earnings limit for NICs, the gains will be more attractive than they will be for the big earners in your organisation. But it might still be worth going ahead for others, too.
Pension-related salary sacrifice can allow you to reward your hard-working staff, despite some of the toughest trading conditions than most of us will have experienced in our business lifetimes. If you want to take advantage in your business, you must have all the relevant paperwork in place and correct for HMRC – this goes without saying. You must also ensure that any employee who will be affected is well aware of all the ramifications of going down this route.
If you’re still in doubt, speak with one of the chartered accountants at Figurit about your options, or we can put you in touch with a pension specialist. We can also advise on all matters regarding business cash flow and tax efficiency.
For more information call Figurit (formerly known as Lansdell & Rose) on 020 7376 933.