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Salary Sacrifice

[ˈsæləri ˈsækrɪfaɪs]



Salary Sacrifice is a scheme where an employee exchanges part of their salary for non-cash benefits. It reduces their income tax and national insurance bill.

More detail:

Salary Sacrifice is an arrangement where an Employee agrees to reduce their entitlement to cash pay so their employer can use that money to pay for selected benefits. These benefits can include childcare, a bicycle for work, pension contributions or an ultra-low emission car.

This scheme reduces the Employee's Taxable Income so they pay less Income Tax and National Insurance contributions.

The amount of Salary Sacrifice an employee receives is available to view on their Payslip.

The new amount of Taxable Income is used by for example banks to assess mortgage applications as they do not take non-cash benefits into account. It also can affect entitlements to allowances such as Maternity Allowance.

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