Making the most of work benefits to minimise your tax bill with salary sacrifice

Your hard work deserves to pay off, but after a while, the harder you work and the more you earn, the more you end up paying in tax.

In those situations, it could be worth considering some salary sacrifice options to ensure that you reap the full benefit of the work you do and minimise tax liabilities.

Alongside offsetting Income Tax, salary sacrifice sees you making smaller National Insurance contributions and thus, potentially, having a greater ability to use the money you have earned for your benefit.

What salary sacrifice options are there?

By far the most common form of salary sacrifice comes in the form of pension savings.

Rather than see your wage steadily increase, and thus your Income Tax and National Insurance payments increase too, there is an option to cap your salary and put the extra value into your pension plan.

This money will not be subject to National Insurance considerations and therefore will be of more value than if it were paid to you directly.

The drawbacks of this method are the length of time you must wait before you can access these funds.

If you are planning to retire early or have exciting plans for your twilight years, then this could be a viable investment in the long run.

Professional development

Although this is not universally applicable, some employer-funded training courses can qualify as a salary sacrifice.

These courses would serve to reduce your taxable income while also equipping you with the skills needed to keep growing professionally.

If retirement seems too far off to invest more income into a pension pot, then utilising professional development could be the route to take.

The course will need to be approved by HM Revenue and Customs for this purpose, so be mindful of this caveat before signing up for training courses.

Workplace benefits

Although it is not currently open to new applicants, a childcare voucher scheme did once exist and may return at some point in the future.

Until then, there are schemes to provide employees with bikes or electric vehicles that can qualify as a form of salary sacrifice.

Given that these tend to be valuable commodities, they are certainly avenues to explore, particularly if you are environmentally conscious.

There are always options available to those who want to be smart with their money, and seeking professional advice can aid in this endeavour.

Want to learn how you can make more from your work with the right salary sacrifice scheme? Speak to our team today.