After UK employer National Insurance contributions rose to 15% in April 2025, businesses are feeling the pinch of cost increases that will directly impact their bottom line.

The good news is that smart and strategic use of salary sacrifice schemes can deliver substantial employer NI savings, while driving engagement, and boosting the employee value proposition.

Download our comprehensive NI Savings Report for real-world engagement and saving statistics and practical strategies on how to offset rising costs.

Understanding the Financial Impact

The NI rate increase might seem marginal, but the effect on businesses has been anything but.

A company with 500 employees earning an average of £40,000 each could face an additional £60,000 in annual NIC costs under the new rate. For many businesses, this represents a significant unexpected expense that needs addressing.

This is where salary sacrifice schemes become particularly valuable. Rather than simply absorbing these increased costs, businesses can implement strategies that actually reduce their overall NI liability while providing employees with benefits they genuinely value.

Do Employers Really Save NI on Salary Sacrifice?

Absolutely. According to research from the Chartered Institute of Personnel and Development, 34% of UK employers are already using salary sacrifice schemes to manage costs and support employee wellbeing.

If you’re managing employee benefits in a medium-to-large business, you’ll be well aware already, and are most-likely part of the 34%. Read on to understand how you can help your business truly maximise savings and drive greater engagement.

Many smaller businesses, however, struggle to make the case to invest in salary sacrifice to actually make cost savings in return. The rest of this article aims to help address this too.

This figure is likely to increase significantly as businesses look for ways to manage the impact of rising National Insurance rates.

The key is understanding that salary sacrifice creates genuine cost savings, not just cost deferrals.

Every pound that an employee sacrifices from their salary is a pound on which you don’t pay the 15% employer National Insurance contribution. Over a full workforce, these savings can be substantial.

What Could Employer NI Savings from Salary Sacrifice Be?

Chances are, you’re already making NI savings through salary sacrifice either through your Pension or through delivering a range of salary sacrifice schemes through your employee benefits platform.

However, could you be making greater savings?

This is the question HR and Reward professionals must ask, and are already asking, as you’ll see below.

Driving even just a marginal increase in engagement with salary sacrifice schemes could result in big NI savings for businesses.

These savings can either be delivered straight to the company’s bottom line or reinvested as part of your benefits strategy into employee rewards or added benefits, for example.

See below how much businesses are already saving.

Real-World Savings: What Companies Are Achieving

The data from our “Navigating Rising NICs” report shows that businesses are already achieving significant employer NI savings through well-implemented salary sacrifice schemes. Here’s what the numbers reveal:

  • Holiday Trading: Average savings of over £130,000 per employer annually
  • Cycle to Work: At Access, we’ve saved businesses more than £10 million in collective employer NI savings
  • EV Car Schemes: Average £56,000 annual NI saving per participating business

One infrastructure services company running salary sacrifice schemes through Access with 2,000 employees achieved a 46% uptake rate with their Holiday Trading scheme, generating substantial savings in both salary costs and National Insurance contributions.

At the other end of the scale, a logistics company with just 75 employees managed a 21% uptake rate, creating annual savings of over £21,000.

These examples demonstrate that employer NI savings on salary sacrifice are real and demonstrable and are delivering real financial benefits for businesses of all sizes, with the potential for even greater savings under the new 15% employer NI rate.

How to Calculate Your Potential Employer NI Savings

Calculating your potential employer NI savings for salary sacrifice is relatively straightforward once you understand the basic principles:

1. Estimate total salary sacrifice across your workforce

2. Apply realistic participation rates for your industry

3. Multiply by 15% (the new employer NI rate)

4. Add any direct salary savings (like Holiday Trading)

For example, if you have 400 employees and achieve a 15% participation rate across various salary sacrifice schemes, with each participating employee sacrificing an average of £2,000 per year, your total annual salary sacrifice would be £120,000. Your direct employer NI saving would be £18,000 annually, plus any additional salary savings from schemes like Holiday Trading.

The actual participation rates you achieve will depend on various factors, including the schemes you offer, how well you communicate them, and the demographics of your workforce.

The Most Effective Salary Sacrifice Schemes

Holiday Trading

Holiday Trading has emerged as one of the most popular schemes for generating employer NI savings. The scheme allows employees to buy additional annual leave, creating both salary savings and National Insurance savings for employers.

Typical engagement rates:

  • Small businesses: 15-20%
  • Medium-to-large businesses: 10-25%

Cycle to Work Schemes

These schemes continue to be highly valued by employees, with average uptake rates of around 7% across all businesses.

The average application value has increased significantly since the removal of the £1,000 cap, creating more substantial per-employee savings.

Electric Vehicle Schemes

EV salary sacrifice schemes typically see uptake rates of around 4%, but the high value of each arrangement means they can generate significant employer NI savings.

With Benefit in Kind rates for electric vehicles remaining frozen, these schemes offer substantial value for participating employees.

Pension Salary Sacrifice

This represents perhaps the most immediate opportunity for many employers. Most businesses already have workplace pension schemes, so optimising salary sacrifice participation doesn’t require implementing entirely new arrangements.

Even small improvements in engagement can generate substantial employer NI savings across your entire workforce.

There’s more advice below on how to increase NI savings from your pension scheme by encouraging scheme engagement.

Strategic Implementation for Maximum Impact

The most successful salary sacrifice implementations don’t treat individual schemes in isolation.

Instead, they create an integrated approach where multiple schemes work together to maximise both employee engagement and employer NI savings.

Running schemes through a single platform significantly improves employee engagement by making benefits more visible and accessible.

When employees log in to access one benefit, they’re more likely to discover and utilise others, creating a multiplier effect that increases your overall savings.

Key benefits of integrated platforms:

  • Reduced administrative burden on HR teams
  • Better employee user experience
  • Improved data insights for optimisation
  • Streamlined compliance management

Addressing Common Implementation Concerns

Many businesses worry about the administrative complexity of implementing salary sacrifice schemes, but modern benefits platforms have largely eliminated these concerns.

The key is choosing providers who offer comprehensive support for both setup and ongoing management.

Employee engagement often concerns employers, but the evidence shows that well-communicated salary sacrifice schemes are typically very popular with employees.

The key is integrating scheme promotion with your broader employee communications rather than treating it as a separate benefits announcement.

Another common concern relates to workforce management, particularly with Holiday Trading schemes.

However, businesses can manage this through clear policies about purchasing limits and by integrating benefits management with workforce planning systems with an all-in-one HR software suite.

Measuring Success

Tracking the right metrics is essential for demonstrating the value of your salary sacrifice schemes and identifying opportunities for improvement.

Essential metrics to monitor:

  • Total employer NI savings vs scheme costs
  • Participation rates by scheme and demographics
  • Employee satisfaction scores for overall benefits package
  • Retention improvements in participating employees

Industry benchmark engagement rates:

  • Holiday Trading: 20% average
  • Cycle to Work: 7% average
  • EV Schemes: 4% average

Taking Action: Your Next Steps

The sooner you drive higher and more sustained engagement with salary sacrifice the sooner you can start to reinvest in your people.

Immediate actions to consider:

  • Model your potential savings based on realistic participation rates
  • Focus on schemes offering the best employee appeal and employer savings
  • Secure senior leadership buy-in with concrete ROI projections
  • Choose implementation partners with proven expertise

Start with schemes that typically deliver the strongest combination of employee engagement and employer savings.

For most businesses, this means Holiday Trading and Cycle to Work schemes as foundation offerings.

Your Strategic Opportunity

The evidence is clear that employer NI savings salary sacrifice schemes offer a proven way to offset rising National Insurance costs while supporting employee wellbeing and engagement.

With businesses already achieving annual savings of over £100,000 through strategic implementation, the financial case is certainly compelling.

A great place to start is with either a new platform or your existing employee benefits and engagement solution.

At The Access Group, we’ve been supporting over 2,000 businesses for over 15 years with our comprehensive employee benefits and engagement solutions.

Now, we’re supporting a large number of businesses in helping them achieve greater ROI from their benefits through reduced NICs while supporting their people.

For more information on how we can help you and your business, get in touch today.

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