Salary sacrifice and deduction schemes to help your people stretch their pay

The deductions/repayments are from the employees Gross annual salary (before tax pay) and result in tax and national insurance (NI) savings.

The deductions/repayments are from the employees Net annual salary (after tax pay).

A salary sacrifice benefit offers tax advantages as they reduce an employee's taxable pay before tax and National Insurance calculations while the salary deduct schemes are cost-neutral, and do not offer additional savings but are an interest and debt-free alternative to loans and credit cards.

If the employee leaves before they’ve fully repaid a benefit, they must pay their employer the balance of the amount outstanding. This should be deducted from their final net pay (regardless if it’s a gross or net benefit).

Some payroll benefits, such as Cycle to Work, are available through a salary deduction method. While employees on or below NMW are not eligible for salary sacrifice, they are eligible for salary deduction. This is where deductions from them are taken from their net salary, ensuring their pre-tax salary doesn’t go below the NMW level.