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Top Benefits of Salary Sacrifice You Should Look

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#finance #financialtips #financing #goals
Published
06/05/2024

Salary sacrifice is an agreement between the employer and the employee. The main purpose of the agreement is to give up a portion of their salary for a non-cash benefit. This can include a retirement fund or any other benefit in the favor of an employee.

The salary sacrifice is a tax-efficient way of contributing to your superannuation. Still not sure whether you should consider salary sacrifice or not. 

Don’t worry; this blog will explain to you the top benefits of salary sacrifice apart from tax reduction:

 

Boost Pension

As it is mentioned, both the employee and employer save money in this scheme if their NICs are lower. Some employers choose to reinvest these types of savings in the company. However, some consider adding these savings to their employees’ pension pot.

This will help the employees to boost their overall amount for retirement. The employer might pay part of all the savings, which will result in increasing the amount.

 

Reduce Tax 

Income tax is stressful for many employees as it will deduct big value out of their savings. If the salary is slightly lower, it can be easier for a person to save more. 

If you are interested in boosting your savings, consider Understanding the Benefits of Salary Sacrifice - TelstraSuper online.

 

Provide Tax Relief to Employees 

Some employees are higher-rate taxpayers and get tax relief on their pensions immediately. This way, they don’t have to claim for their additional tax relief through the tax return process. 

With salary sacrifice, high taxpayers don’t need to claim that extra 20% tax anymore. This is because tax relief is automatic during the payroll process.

 

Boost Business Savings 

When it comes to saving money through salary sacrifice, it is not the employees who make the most out of it. Before this agreement, the employer had to pay both NIC and workplace pensions for each of their employees.

It’s always the employer’s decision on how they want to invest in the company’s savings for a salary sacrifice scheme. The amount will be invested for the company’s growth and added amount in the pension. 

 

Increase Employee Satisfaction 

Happy employees mean more productivity. By applying a salary sacrifice scheme, employees automatically get more on their gross pay. This will make employees happier and more enthusiastic about working and receiving gift cards.

When the employer adds savings to the super account of their employees, it will make the employees feel appreciated for their hard work. By paying more respect to the employees, employers earn more appreciation and dedication for it.

 

Non-Cash Benefit Alternative

In many companies, a retirement fund is not always the option for the employees when it comes to salary sacrifice. There are further non-cash benefits that being an employer or employee you can consider to avail:

  1. Childcare 
  2. Low emission vehicles 
  3.  A bicycle 
  4. Other benefits depending on your company

In the end, investing in salary sacrifice works for both employers and employee benefits. The lower an employee will earn, the less tax they will have to pay.

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