What is Salary Sacrificing?
Pensions
Salary sacrifice can be defined as an arrangement where an employee gives up the right to a specific amount of their future salary or bonus in exchange for a non-cash benefit, typically an employer pension contribution.
As a result of this scheme both the employer and employee can save money on both income tax and National Insurance Contributions.
It should be pointed out that salary sacrifice is a matter of employment law, not tax law. The moment a salary sacrifice arrangement is set up the employee agrees to sacrifice entitlement to future salary or bonus before it is paid.
As always one should seek expert advice when implementing such a scheme to ensure that it is executed in the correct legal manner.