Research: Salary sacrifice in flexible benefits

Benefits that yield tax/national insurance savings can be invaluable, but salary sacrifice may not suit all employees, says Debbie Lovewell

Such a high number of employers now offer benefits with tax and/or national insurance (NI) breaks through a flexible benefits scheme, it is perhaps not surprising that the percentage doing so has remained fairly static over the past few years.

Given that the 11% that do not offer tax and NI-efficient benefits must be aware of the savings available, it is likely they have considered them, but decided such perks are not right for their organisation.

This may be because some employees are unable to take up tax-efficient benefits when they are offered via salary sacrifice, for example, if giving up a portion of their gross salary will cause their take-home pay to fall below the national minimum wage. Also, staff may be unable to do so because it would affect their entitlement to some state benefits.

For the 87% of respondents that do offer tax-efficient perks through flex, the employer savings on NI contributions will be more important than ever in these difficult economic times. Although 43% use these to fund their flex schemes and 22% to save money for the business, over the next year we may see a rise in the number using these savings to fund other benefits or initiatives within the business.

Click on the links below for more sections:

Who are the respondents; key findings
Attitudes to flexible benefits
Structure of flexible benefits schemes
How flexible benefits schemes are administered
Alternatives to flex plans
Pensions and flex
Crucial communications
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