Salary Sacrifice - Employer Savings (Class 1 NIC)
Discussion
As above. New to SS Schemes, but trying to extract as much cost benefit as possible.
Would I be right in saying the Class 1 NIC savings the Employer makes as a result of the salary sacrifice can be shared with my Employee either in part or the whole amount?
Our provider details these Employer saving out separately and on average my Employer looks to make a £100 a month saving.
If in agreement with Employer, can this be used to offset the net salary sacrifice further?
Would I be right in saying the Class 1 NIC savings the Employer makes as a result of the salary sacrifice can be shared with my Employee either in part or the whole amount?
Our provider details these Employer saving out separately and on average my Employer looks to make a £100 a month saving.
If in agreement with Employer, can this be used to offset the net salary sacrifice further?
The employer can do what they want. If they're £100 better off because of NI savings they can put it towards the car. Its effectively giving the employee extra pay that is sacrificed to help fund the car. There's also no obligation on them to do so.
However.. if you were going to sacrifice say £800 for a car, but because the resulting £100 NI savings by the employer is also put towards the car, that initial £800 is reduced to £700, your salary is £100 higher than you thought it was going to be which you DO pay tax and NI on. You're still better by the post tax amount of the extra £100 compared to sacrificing the full £800.
And because your salary is £100 higher if you now only needed to sacrifice £700, the employers NI is also higher (than if you'd sacrificed £800) which erodes the £100 saving they thought they'd got, and so they can't actually offer you as much as you thought
The TL;DR - yes if they wanted to, but the maths isn't quite so simple.
However.. if you were going to sacrifice say £800 for a car, but because the resulting £100 NI savings by the employer is also put towards the car, that initial £800 is reduced to £700, your salary is £100 higher than you thought it was going to be which you DO pay tax and NI on. You're still better by the post tax amount of the extra £100 compared to sacrificing the full £800.
And because your salary is £100 higher if you now only needed to sacrifice £700, the employers NI is also higher (than if you'd sacrificed £800) which erodes the £100 saving they thought they'd got, and so they can't actually offer you as much as you thought
The TL;DR - yes if they wanted to, but the maths isn't quite so simple.
Edited by Gone fishing on Wednesday 26th June 07:53
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