As employers are now on the hook for higher National Insurance contributions (NICs), it may be time to introduce a salary sacrifice scheme to your benefits package.
 
Businesses must now pay 15% on their employees’ NICs, instead of 13.8%.

On top of this, the threshold at which employers must start paying NICs has been reduced from £9,100 to £5,000. This will remain at £5,000 until 6 April 2028. From that point, it will continue to increase every year, in line with the Consumer Prices Index (CPI).

According to estimates from the Office for Budget Responsibility (OBR), overall, the changes will add 2% to employers’ payroll costs [1].

Read more: Why now may be the ideal time to embrace salary sacrifice

Size matters – and appears to influence whether companies offer salary sacrifice

According to research, just 48% of UK companies currently offer salary sacrifice. And the size of a business affects the likelihood of having a scheme in place.

Only 38% of companies with 20 employees or fewer offer salary sacrifice, in comparison to 49% of companies with 21–249 employees. Meanwhile, 67% of larger corporations with more than 250 employees have salary sacrifice as part of their benefits package [2].

While there are important steps you must take to implement salary sacrifice, it may be easier than you think. Plus, with an expert financial planner by your side, it could be made far simpler.
 
In fact, statistics from Titan Corporate Benefits go a long way to prove this true.
Despite the figures above, 90% of our clients already have a salary sacrifice scheme up and running.
 
Introducing a salary sacrifice scheme is easier than you might think

One of the biggest concerns for many employers is the idea that there’ll be a colossal amount of paperwork involved.
 
There’s no getting away from it, there is some – but it’s not as bad as you may think.

Salary sacrifice is an agreement to reduce an employee’s entitlement to payment in cash, in return for a non-cash benefit. As such, employers must change the terms of an employee’s contract to set up a salary sacrifice arrangement, and employees need to agree to the change.

There’s no need to change all employee contracts – simply use a letter of variation

One common misconception is that you need to rewrite contracts and get employees to agree to the change with a signature.

Salary sacrifice is a voluntary reduction to an employee’s salary, and must be agreed on by both employer and employee before it takes place.
 
You can do this using a letter of variation.
 
If you were imagining a giant HR headache, this will be welcome news.

Salary sacrifice isn’t suitable for everyone

Employees on lower salaries may gain little benefit and changing their salary could hamper their ability to claim state benefits.

As such, employees have the right to opt out of the scheme if they find it’s not the right fit or their circumstances change.

On the opposite side of the scale, where salary sacrifice is being used for enhanced pension contributions, you should make employees aware of the pension Annual Allowance (£60,000 in 2025/26).
 
Any contributions above the annual threshold will be liable for tax, so your employees on higher earnings may wish to consider this when choosing how much they want to sacrifice.

Again, this is where your Titan Financial Planner can assist.
 
From workplace presentations to explain salary sacrifice to your employees, to individual consultations and support, Titan are here to help you, your HR team, and your employees from the start.

Get in touch
To find out more about how we can help you introduce a salary sacrifice scheme to your business, please get in touch.

Email [email protected] or call us on 0800 048 0150.

Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

Workplace pensions are regulated by The Pension Regulator.
TWP460