Salary Exchange – an obvious win:win for both employers and employees
Posted on 17th November 2017 at 09:24
With auto enrolment now well established and working well, employers need to look ahead and plan effectively for stage two.
From April 6th 2018 employers will need to double their minimum contributions from 1% to 2% and then plan for a further 1% increase from April 2019. This will mean significant additional costs for both employers and employees alike.
If you’re looking to explore mutually beneficial ways of sharing the financial commitment, Salary Exchange offers a convenient and practical solution. Salary Exchange enables employees to buy benefits or increase pension contributions in a tax efficient way, with very little or no cost to themselves or you, the employer.
A clear win:win for those concerned
Salary exchange is an agreement between an employer and employee to exchange part of their gross salary for a tax free benefit, so employees pay no tax and National Insurance Contributions on the exchanged amount and in return, you are able to give a non-cash benefit such as increased pension contributions. Salary Exchange schemes can also include tax-free benefits such as, cycle to work schemes, childcare vouchers and work related training.
• Employers pay no National Insurance on the part of the salary exchanged
• The money saved is used to help pay for the mandatory increases in employer pension contributions, or additional non-cash employee benefits.
• Employees pay less tax and National Insurance, receive an enhanced benefits package and when set up correctly, could actually improve their take home pay.
As with all things financial, getting the appropriate advice is essential. If you want to fully understand how Salary Exchange can work for you and your workforce, drop us a line , or call 01767 222730 or 01162 898847
Tagged as: Salary Exchange
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