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Salary Sacrifice is where an employee chooses to give up part of their salary for a given period of time in return for a benefit provided by the employer, the value of which is exempt from Tax and National Insurance contributions. As the employer is providing a benefit then some of these benefits will attract a tax charge on the employee. The benefits that do not have a tax charge are:
- Mobile phones
- Cycle to work
- Childcare vouchers
- Buying annual leave
Where there is a tax charge this will be estimated at the outset of the scheme so that you are aware of the cost of the sacrifice compared to the benefit being given. It is possible that changes in your salary or in HMRC regulations and limits could impact on the net cost of the benefit. However, it is unlikely that this change would mean that the overall cost was materially increased and in some cases it could result in additional savings. There is a £100 per month maximum that can be deducted from your salary for participation in salary sacrifice scheme this excludes the car lease scheme. Any member of staff with an attachment of earnings or who are currently managed under a HR policy e.g. sickness, disciplinary or performance management may not be accepted.
As the schemes require staff to sacrifice part of their salary in return for a benefit, if you are a casual worker your contract will be for zero hours and therefore the sacrifice cannot be made and if you have a fixed term contract you can only participate in the scheme if participation can be completed before the end of the fixed term. The schemes are open to part time employees. However, participation is subject to National Minimum Wage limit.
You have to have completed your probationary period before you are eligible to participate in any of the schemes.
Each scheme is administered separately and gives different opportunities to join. Some schemes, such as the annual leave scheme start on 1st April each year. Each scheme has its own participation length which is advised to you in advance. On leaving the Trust you will be liable for any outstanding salary sacrifice monies still owed, this will be deducted from your final salary payment. If more than your final salary is owed you will be invoiced for the remaining amount.
It is important that you read this guidance and FAQ's document before you make a decision to participate in a salary sacrifice arrangement.
Please contact Staff Benefits if you require any further information.
For any pensions related queries, please contact the pensions department on 01904 725196 or 01723 342242.
You may wish to seek your own independent financial advice if you feel your salary or other benefits may be affected by any of the information within this guidance.
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