With costs continuing to rise, many employers and employees are searching for sensible ways to reduce outgoings without scaling back benefits. Salary sacrifice can be a highly effective solution, yet it is still overlooked by many businesses.

Put simply, salary sacrifice allows an employee to exchange part of their gross salary for a non-cash benefit, such as a pension contribution, an electric car or a bicycle. As this arrangement is made before tax and National Insurance (NI) are applied, it can result in savings for both employers and employees, while also enhancing the overall benefits package.

Following the Autumn Budget 2025 announcement, there was significant attention on a proposed cap on National Insurance relief for pension contributions. However, this cap will not take effect until 6 April 2029. Until that date, the current rules continue to apply and the existing advantages remain in place.

From an employer’s perspective, salary sacrifice can be a valuable way to strengthen employee benefits, support recruitment and retention, and reduce tax costs. For employees, it can make valued benefits more affordable at a time when managing cash flow is particularly important.

If you would like to see how salary sacrifice could work for your business, we would be happy to help. We can calculate and compare the tax and NI position and clearly demonstrate how salary sacrifice could be implemented in practice for you and your team.