The top 5 salary sacrifice benefits

‘Money changes everything’.

Or in this instance, money to be paid changes everything!

Who ever thought we’d be referencing an 80’s hit by Cindie Lauper when talking about the impact Labour’s budget announcement will have on employers far and wide.

With tax rises worth £40bn due to fund the NHS and other public services, it’s fair to say businesses have been hit harder than a coffin nail.

And with the increase in National Insurance employers pay going from 13.8% to 15%, it will certainly have an impact on the financial packages provided for employees.

But how can employers navigate this change? Remember, when it comes to mitigating National Insurance rises, employee engagement is your ace in the pack.

But it’s also vital that employers communicate and emphasise the value of salary sacrifice benefits, in order to help both themselves and employees save.

But which are the best ones available? Here, we look at some of our favourite salary sacrifice benefits, and the partners we have available through our Marketplace offering.

‘We’re all going on a summer holiday’ (Getaways during other times of the year are available).

While we appreciate some of you might be more Keith Richards than Cliff Richard when it comes to your taste in music, this benefit is bound to have everyone dancing to the same beat.

Whether employees are looking to take the kids away once school’s out, simply want a few days to relax and reset or need to take care of some important life admin, Holiday Trading is the ideal benefit.

Typically, Holiday Trading allows employees to purchase up to five extra days of annual leave on top of their contracted allowance. What’s better, they can even make tax and National Insurance savings on the trade, ensuring you make savings too.

But what if they want to save for a rainy day? For those that perhaps prefer to work, it’s possible to sell any unwanted annual leave (be mindful that there is a limit to the amount of days you can sell too). You as the employer will pay colleagues at the agreed daily rate for working, but this of course is subject to tax and National Insurance.

Either way, employees can either choose to spend more time with the family this summer or put some money aside for a weekend trip.

Zest’s holiday Marketplace offerings

Employees can use the tax and National Insurance saved via their Holiday Trading purchase on a selection of offerings from our hand-picked Marketplace providers.

HotelPlanner

HotelPlanner is one of the world’s top providers of individual, group and corporate travel bookings, specializing in unique “Closed User Group” discount rates. We have a portfolio of 50,000 hotels with exclusive pricing where the discounts can be up to 65%.

UTC Travel

utc.travel is the UK’s leading travel club bringing together everything you need, to travel everywhere, all at trade prices.

Inspire

Show your employees you understand the importance of having a break to recharge their batteries. TravelScheme by Inspire allows staff to spread the cost of their travel/holiday without making costly credit arrangements.

‘Money can’t buy me love’.

Whether the Beatles are right or not is up for debate, but it can certainly set you up for a comfortable retirement.

Employers can face a difficult task educating different demographics on the importance of their Pension, but when offered via salary sacrifice it can help save on tax and National Insurance, which ensures that it appeals to all parties.

And while we appreciate they’re not always the most captivating of subjects, according to our latest research, 32% of employees are now asking for increased Pension contributions.

Some of the advantages of offering a salary sacrifice Pension include:

• The ability for employees to grow their contributions at a quicker rate, as you as the employer will be making a higher contribution each month.
• Lowering a salary to align with salary sacrifice means employees pay a lower rate of tax and National Insurance too.

It’s worth remembering, Pensions are typically the biggest financial benefit you as the employer provides, and the biggest that an employee contributes to (other than salary).

And what better way to give back to Mother Earth than by offering more sustainable Pension offering?

‘I want to ride my bicycle’.

While Queen’s Bicycle Race perhaps won’t get you up and dancing, Cycle to Work will certainly have you putting pedal to the metal.

It’s the ultimate benefit for combining wellbeing and financial savings. Not only does Cycle to Work save on tax and National Insurance, it also keeps employees fit and helps to drastically reduce the cost of commuting (an ever bigger win if you ask us). What’s more, it also allows the employee and employer to be more sustainable.

According to CycleScheme¹, 51% of people now want to cycle to work! And with the opportunity to spread the cost of a new bike over 12 or 18 months while making tax and National Insurance savings, you don’t have to be Mark Cavendish to realise making the transition from seat to saddle is a good deal.

So, how does the Tour de France of benefits work?

• Employees can hire a bike and/or safety equipment to travel to work, usually for a period of 12 or 18 months.
• Saving employees tax and NI, they select a voucher or choose a bike from you or your third party.
• They will agree with the hire arrangement and pay the full value of that through salary sacrifice.
• At the end of the hire agreement, the employee can either extend the agreement, return the cycle and/or equipment or buy it outright.

Providers available via our Marketplace:

CycleSaver

Not your average cycle to work scheme. Save up to 47% on Lime, Forest, Santander Cycles, Beryl, and more!

Gogeta Bike

Gogeta Bike offers your employees the best savings because their low commissions mean that bike retailers never add a surcharge when accepting our vouchers. Employees can get a bike one month and new lights the next, all from the same voucher, all tax-free.

‘Life is a highway’, ‘Fast car’, ‘Mustang Sally’.

Keeping with the lyrical opening theme for each benefit, we’re spoiled for choice when it comes to the topic of cars, but perhaps not so much when it comes to Electric vehicles.

But just because one hasn’t been featured in a classic chart-topper just yet, doesn’t mean it’s not one of our favourite benefits when it comes to saving money.

Using a salary sacrifice scheme for an electric vehicle (EV) offers several benefits for both employees and employers:

For employees, since the lease payments are deducted from the gross salary before tax and National Insurance contributions are calculated, employees pay less income tax and NICs. This effectively reduces the overall cost of the vehicle.

In addition to being a more sustainable choice that benefits Mother Earth compared to petrol or diesel cars, electric vehicles typically have lower running costs too. Currently, electric vehicles do not have to pay for road tax.

Compared to leasing a petrol or diesel car, electric vehicles benefit from lower Benefit-in-Kind (BIK) tax rates

Employers also benefit from reduced National Insurance contributions because the employee’s gross salary is reduced (music to your ears thanks to the recent NI rises). Softer benefits to employers include enhancing the employer’s benefits package which, in turn, may help to reduce recruitment costs. Providing access to electric vehicles also helps companies enhance their CSR profile.

How does the benefit work?

An EV salary sacrifice schemes allow employees to lease a new electric car through you as the  employer for a set period, such as a year or longer. They pay for the lease directly from their pre-tax salary, before income tax and National Insurance deductions are applied. This arrangement saves them the tax they would have otherwise paid on the lease amount.

Employers typically work with leasing companies to provide these vehicles. The terms of the agreement, including duration and the type of vehicle available, are predefined, and employees must agree to these terms.

And if you want an easier way for employers to find out how much they can save each month by leasing an electric vehicle via salary sacrifice, then you can use our nifty calculator here.

And don’t forget our EV Marketplace providers:

The Electric Car Scheme

The Electric Car Scheme is an employee benefit that allows your team to lease a new electric car through their gross or pre-tax income. This means they will spend less on their income tax and NI contributions, enabling them to get a new electric car 30-60% cheaper!

Octopus Electric Vehicles

Pizza on a Friday, or EV on the driveway? We know which one we’d stick around for. Your team get the car, charger and energy all in one, saving up to 40% with Octopus Electric Vehicles. Simple setup, minimal admin, maximum reward for your people.

Andersen EV

Andersen EV is a high-growth, privately-owned UK company known for using premium materials like aluminium, wood, and carbon, all sourced from local suppliers to manufacturer aesthetically pleasing Electric Vehicle Chargepoints.

Vehicle Benefits

Peace of mind breakdown cover for less! Vehicle Benefits partners with the RAC to offer employees discounted vehicle-specific breakdown cover rates.

It’s worth remembering, this covers any vehicle, so even those without an electric vehicle can benefit.

Implementing Zest

Keen to implement more salary sacrifice benefits to help mitigate the rising costs of employer National Insurance? Book a demo with our fantastic team today and find out how our technology can couple with the implementation of our Marketplace benefits.