Salary sacrifice scheme—employee FAQs
Salary sacrifice scheme—employee FAQs

The following Share Incentives guidance note provides comprehensive and up to date legal information covering:

  • Salary sacrifice scheme—employee FAQs

Produced in partnership with Lewin Higgins-Green of Macfarlanes LLP

[For use only where the employee is foregoing salary for the following benefits that retain Tax and/or NICs advantages permitted pursuant to the Finance Act 2017:

  1. Employer contributions to registered pension schemes

  2. Employer-supported childcare

  3. Cycle-to-work schemes

  4. Ultra-low emission cars]

  1. 1

    Can you give me a brief overview of the scheme?

  2. Broadly speaking, you are being offered the opportunity to exchange some of your taxable salary for a specific benefit in the form of [describe scheme (ie childcare vouchers, cycle to work scheme or pension)] that can be provided to you free of tax or National Insurance contributions, or both. Thus, although your taxable salary is reduced, you are provided with a benefit of an equivalent value which has the advantage of not being subject to tax (and/or National Insurance).

  3. 2

    Is the scheme compulsory?

  4. No—the scheme is open to all [eligible] staff, but staff need only participate if they wish to. There are certain limits to eligibility, in particular that your gross basic pay does not fall below the applicable National Minimum Wage or National Living Wage at any time during employment, after the salary sacrifice reduction.

    [Insert any further eligibility