What are the benefits of participating in Salary Exchange?

Article author
Nneka
  • Updated

When employees participate in the salary exchange or salary sacrifice scheme they and the Company will both pay lower National Insurance Contributions (NICs) on the employee's reduced salary. As an employee, you can use your NIC to:

  • Increase your payments into your pension plan
  • Increase your take-home pay 

For companies, this allows you to attract and retain top talent as this will keep your benefit offerings competitive for UK-based employees.

Further to the above benefit, Remote has decided to pass on to employees, 50% of the employer NI savings that it will make as a result of employees choosing to contribute via Salary Exchange. In the current tax year, Employers pay 13.8% in NI contributions. This means that 6.9% of these savings will be contributed to the employees' pension fund. 

Important Note
Starting from April 1, 2024, employees currently contributing through a net pay arrangement scheme will be automatically transitioned to a salary sacrifice scheme, unless they choose to opt into a relief at source scheme or if they are close to earning the national minimum wage.

See also: All about Salary Exchange in the UK

This change will result in both a slightly higher pension contributions and take-home pay. 

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