Employee Benefits – Is it worth the sacrifice of a salary?
Salary sacrifice allows you to give up a portion of your salary in exchange for non-cash benefits such as childcare or healthcare. Salary sacrifice has the advantage of reducing your taxable income, which can lead to a decrease in your take-home pay.
There are potential downsides to salary sacrifice. You should be aware of these before you agree to any arrangement. Salary sacrifice can lower your retirement income as you are unable to contribute as much to a pension fund. You may also have to repay benefits that you received if your salary sacrifice period ends before you quit your job.
It is important to weigh all the pros and cons before agreeing to a salary-sacrifice arrangement. Is salary sacrifice worth it? We will discover in this article.
Employee Benefits: Is it worth the sacrifice?
What’s a Salary Sacrifice Car Scheme?
A salary sacrifice car plan is a type if salary sacrifice arrangement in which you agree to give up a portion of your salary in exchange for the use of a company vehicle.
This scheme has the main benefit of helping you to save money on taxes as well as National Insurance Contributions (NICs). You could, for example, save as much as PS1,090 on taxes and NICs if you are a basic-rate taxpayer. This is possible by sacrificing PS5,000 from your salary.
Salary sacrifice to electric cars
Many people now turn to salary sacrifice plans to get electric cars. You can get an electric car at a reasonable monthly cost. An electric car can also help you save money because you don’t need to pay petrol or fuel.
The Benefits of Electric Vehicles?
Electric vehicles (EVs), which are becoming more popular due to technological advances that make them more practical and affordable, are becoming increasingly popular.
EVs have many advantages over diesel or petrol cars.
Lower running costs: Electric Vehicles have lower running costs than diesel or petrol cars. You only need to charge them up and not buy/refill fuel.
Zero emission: Electric Vehicles emit zero emissions. This is better for the environment, and can help you to save money on your road tax.
Government incentives There are a variety of incentives for EV owners. One is the Plug-in Car Grant which provides up to PS3,500 towards a new EV’s cost.
The disadvantages of a salary-sacrifice car scheme
Before signing up for a salary-sale car scheme, there are some potential downsides. If you quit your job prior to the end of the contract you might have to repay all or part of any benefits you received. Salary sacrifice arrangements can also reduce your retirement income because the money you have to contribute to a pension pot will be reduced.
It is important that you consider all the pros and cons before agreeing to any salary sacrifice arrangement.