Salary Sacrifice more a Benefit than a Sacrifice
Dental employers now have the option to use something known as a Salary Sacrifice, and before any employees groan with fear over cuts to their wages, it isn’t going to affect any salaries.
This may warrant the question of “why name it Salary Sacrifice?” but the scheme may be able to increase the wages of dental employees, without it costing the employer a thing.
The scheme itself is a pension scheme. Pensions usually benefit well from income tax relief but salary sacrifice schemes can further the list of benefits, due to the fact that they are excluded from national insurance payments. A welcome relief when you look at the fact that national insurance payments are steadily increasing, by one percent in April 2011 alone.
The scheme stands to save employees money by increasing their pension pot, the biggest winners being those on the lowest rate of tax, who could see an increase of a considerable 34%, top level tax payers cold also see an impressive increase of 18% which is something not to be sniffed at.
The scheme works because the salary sacrifice isn’t included in national insurance payments, as such the costs that both employees and employers pay out is greatly reduced at the cost of the HMRC
As such, the name is rather misleading, and sometimes puts people off before they even begin researching it, an opinion that you can’t blame people for! But in fact, neither the employer nor their employees lose out or have to sacrifice anything.
The scheme is set up through a employee/employer association, meaning sole traders and partners will not benefit, although directors of limited companies will still be able to profit from the scheme.
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