Help Centre for Employers

How does salary sacrifice work?

Salary sacrifice can be used to save national insurance (NI) for both employee and employer.

The process involves the employee giving up a part of their pay and the employer then making a payment to the pension scheme equal to the amount given up.  The effect is that the employees pay is reduced by the amount given up and it is this lower amount that is used to calculate how much NI is payable.

NB. This is not the same as an Additional Voluntary Contribution, which is paid by the employee.

 

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