Employee benefits marketplace provider Love Your Employees has heralded salary sacrifice as a key solution to help businesses and their employees mitigate the effects of the forthcoming national insurance increase.
From 6th April 2022, national insurance contributions will increase by 1.25%, a move that has been criticised in the midst of what has been dubbed the cost-of-living crisis.
To help people with increased outgoings, Love Your Employees is encouraging businesses to use salary sacrifice as a solution. The scheme has been running for over 25 years and is used by 87% of the world’s FTSE 500 companies.
Salary sacrifice allows employees to contribute to their pension from their gross pay, meaning they will be taxed at a lower level of salary. This scheme will not only allow employees to contribute to their pensions in an affordable way, but it also means they and their businesses will pay lower rates of national insurance.
Elliott Smith, co-founder of Love Your Employees, commented: “The national insurance increase is coming at a time when consumers are seeing their purse strings tightened by inflation and increased household bill costs.
“We know it’s going to have a huge impact on millions of households, and we’re committed to helping both businesses and employees mitigate these costs. By implementing salary sacrifice, businesses will reduce their national insurance contributions and could increase their employees’ take-home pay, all while encouraging them to pay into an essential pension pot.
“At a time of rising living costs across the board, we’re here to help businesses and their people to tackle further increased living expenses.”
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The national insurance rise has been criticised because it will have more of an impact on lower earners. Workers will pay 13.25% on their earnings between £9,800 and £50,268, up from 12% but this will disproportionately affect those on the lower end of the scale.
Love Your Employees is the UK’s first employee benefits and wellbeing marketplace, designed to help employers source benefits for their people and assess their existing perks and benefits with its healthcheck service. By using the healthcheck, businesses can identify gaps in their wellbeing and benefits strategy and understand how they can improve it. Love Your Employees is offering a free review to employers who are interested in salary sacrifice, which will show business how much they could save on national insurance.
Sources
https://www.bbc.co.uk/news/uk-politics-58436009
