Whether you want to introduce new salary sacrifice schemes to your staff or overhaul your current benefits, finding the right salary sacrifice providers is crucial.
Achieving the right level of benefits engagement and having an employee benefits offering that supports those wider HR goals and objectives, such as improving recruitment or retention for example, rests on finding the right salary sacrifice providers for your business.
As we discuss further in this article, most employers offer salary sacrifice schemes. However, do they all offer the right schemes? Or achieve the benefits engagement they’d hoped for? The answer is, probably not.
The right providers for your business will be the ones that can advise on the most appropriate salary sacrifice schemes for your staff, take away all that time-consuming administration and fit everything together under one roof, in budget and on-time.
They’ll help you introduce salary sacrifice benefits that make a genuine difference to the lives of your employees and they’ll help you achieve a strong ROI on your employee benefits too.
So, let’s dive in and take a look at your options.
What is salary sacrifice?
The UK Government define a salary sacrifice arrangement as “an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.”
Employees sacrifice some of their salary in return for a benefit, for example a new bike or increased annual leave, and as such they can save on tax and National Insurance (NI).
Employers can also save on tax and NI too through salary sacrifice.
In years gone by, salary sacrifice has allowed employees to save on childcare through childcare vouchers or get their hands on new tech for less and improve their computer literacy.
While these schemes no longer exist or are closed to new entrants, salary sacrifice has since opened up a number of new opportunities for employees to:
- Save in other areas of their life
- Improve their work-life balance
- Reduce their carbon emissions output.
For employers, salary sacrifice schemes can:
- Improve employee retention
- Improve recruitment
- Boost employee benefits engagement
Finding the right salary sacrifice providers, therefore, can be transformative for your business from a HR perspective!
Why employers implement employee benefits
Employee Benefits, the UK’s leading employee benefits online publication, conduct some really insightful research each year into benefits, healthcare and pensions.
Their research from 2020 provides some key insight into why employers offer employee benefits.
Their research shows:
- 69% offer salary sacrifice benefits to all staff
- 87% offer employee benefits to improve employee health and wellbeing
- 83% offer benefits to improve recruitment and retention
- 16% offer employee benefits to reduce their NI bill.
Salary sacrifice schemes can support with each of these and provide loads of benefits for employees too.
This offers just a small insight into the power of salary sacrifice and why businesses everywhere utilise salary sacrifice employee benefits.
Therefore, finding the right salary sacrifice providers for your business can be transformative for both you and your employees.
Salary sacrifice benefits options
The same research looked into the types of salary sacrifice benefits employers typically offer their staff.
According to the research, of those who offer salary sacrifice benefits to their staff:
- 75% offer the Bike to Work scheme
- 74% offer pension contributions
- 12% offer pensions advice
- 10% offer company cars
- And 8% offer ULEVs through salary sacrifice.
The Bike to Work scheme is certainly a hugely popular benefit. Between March and September 2020, the Cycle to Work Alliance saw an increase of nearly 60% in new Bike to Work scheme joiners compared to the same period in 2019.
Through the scheme, employees can save up to 43.25% on the cost of a brand-new bike and accessories, while employers can save 15.05% on NI.
The Car Benefit scheme is also becoming a hugely popular salary sacrifice scheme, with a focus on ULEVs including electric cars.
Employees can benefit from a 0% Benefit-in-Kind tax on electric cars through the scheme, making it the cheapest way to drive electric.
This comes at a time where many are looking to cut their carbon emissions and the UK government looks to hit ambitious carbon emissions output targets by 2035.
Holiday Trading, where employees can buy or sell annual leave from and to their employer, is another great salary sacrifice scheme.
Employees can improve their work life balance and can save on tax and NI, while employers can save on NI and employer salaries.
MotorSave is a brand-new salary sacrifice scheme introduced in 2020 to help employees save and spread the cost of car maintenance.
Employees can save up to 13.25% and spread the cost of their MOT, service and routine maintenance, keeping them safer on the roads and making running their car lighter on the wallet.
With these great salary sacrifice options available, utilising the right salary sacrifice providers is key to ensure you don’t end up with a mountain of administration and the schemes fit within your budget.
How salary sacrifice providers can help
Salary sacrifice providers can help tie all of this together for you.
Using employee benefits technology, salary sacrifice providers will help you source and host the right schemes for your business (as well as any other employee benefits you may already have or wish to include) through a dedicated platform.
Sourcing and offering individual salary sacrifice schemes can be time consuming and costly.
Salary sacrifice providers can streamline the whole process and ensure you get the right benefits out to your staff, boost employee benefits engagement and achieve a strong ROI.
Through a dedicated provider, you’ll get expert advice, extra valuable insight into how salary sacrifice schemes are benefitting other employers right now and how your business can reap those benefits too.
What does the future hold for salary sacrifice?
Using dedicated providers, you’ll be able to optimise your employee benefits offering moving forward as the needs of your employees change.
Salary sacrifice schemes have huge potential, which we’ve actively encouraged the UK government to utilise in the wake of the pandemic ourselves.
We believe salary sacrifice can be used to support employees and the government with many of the new issues they face now as a result of the pandemic.
As we’ve seen in recent years, the government have altered, removed salary sacrifice benefits and introduced new legislation to meet the changing needs of employees, with the removal of childcare vouchers to new entrants and the introduction of the 0% Benefit-in-Kind on salary sacrifice electric cars, for example.
The needs and priorities of everyone have changed drastically in recent times.
As a result, the government have made many changes, some involving tax such as allowing people to claim tax to cover the extra cost of bills for those working from home.
Moving forward, the government may make further changes involving tax and national insurance, under which salary sacrifice could fall.
This means there could be further changes either to current salary sacrifice schemes or the introduction of new schemes to help support the objectives of the government and the changing priorities of the public, for example like reducing Benefit-in-Kind tax on electric cars to help support government emissions targets.
Whatever happens moving forward, salary sacrifice schemes will always be an integral part of any company’s employee benefits offering.
Utilising the right salary sacrifice providers is therefore crucial and as mentioned could make a significant difference to your business when it comes to employee recruitment, retention and being an employer of choice.