Simple salary sacrifice

Simple salary sacrifice

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A client's employee has suggested a salary sacrifice in favour of an increased pension contribution.

The client is thinking of supplementing the employee's pension with the employer's NI saved.

Are there other finacial considerations to make before the client presses the button?

All comments gratefully received.
Graham Kemp

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By jhillassoc
02nd Oct 2006 17:06

Salary Sacrifice
Salary sacrifice can be a difficult area and will only be succesful for tax purposes if the employee has not already become entitled to the earnings being "sacrificed". This is easier to show when it is a bonus that is being sacrificed (and the sacrifice is made before the employee becomes entitled to the bonus) but it is more dificult with a salary because, normally, the employee becomes entitled to his or her annual salary at the start of the salary year so giving up part of the salary part way through the year is unlikely to be a succesful salary sacrifice.

John Hill & Associates

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