What is salary sacrifice?

Salary Sacrifice is a way to offer benefits which can provide

tax and/or National Insurance (NI) savings, giving you a cost
effective way to get the products and services you want.

Salary Sacrifice defined Benefits in Kind

Salary Sacrifice is a change to your terms and
conditions of employment and is defined as
giving up the right to part of your salary in
exchange for your employer providing a non
cash benefit of a similar value. Put simply,
you reduce your salary and get something
else in its place.
As an example, you may give up 1,000 of
salary, in exchange for a 1,000 bike for your
commute to work. And heres why you might
want to do that...
The 1,000 you give up is taken as a reduction
of your gross salary, before tax and NI is
calculated. The below demonstrates this
in action.
Even though were using Salary Sacrifice, not
all of these benefits will offer both tax and NI
savings. Some of the benefits are taxed but
offer an NI saving (e.g. dental insurance).
These benefits are classified as Benefits in
Kind. This means that you will be taxed on
them, but you can still make savings as NI
will not be charged on the benefit.
Although you will pay less tax immediately,
tax will still be due on the value of the
benefit. HMRC will be notified through a
system called the P11d. Once notified, HMRC
will make an adjustment to your tax code and
the tax will then be collected from your pay.

John earns 20,000 and has spent 1,000

Protecting your salary
on a bike: Your salary figure is used beyond Boots.
For example, when you apply for a mortgage
Cost of bike 1,000
or other loans, this may be used in the
Reduction in salary 1,000 calculations, so we protect you by using the
Resulting salary 19,000 Reference Salary to make sure youre not
Tax saved on value of bike (at 20%) 200 negatively impacted.

NI saved on bike (at 12%) 120

Cost of bike from take-home pay
So the bike, worth 1,000, actually only costs
John 680! Plus John is able to spread the
cost over 12 months. That means John gets a
1,000 bike for 57 a month.
Protecting you
680
We would like to offer Salary Sacrifice to
everyone but we have a duty of care to
protect you against falling below the National
Minimum Wage or the National Living Wage
(if you are 25 or over).
If your salary reduces in the future and
your selections take you below the National
Minimum Wage or National Living Wage (if
you are 25 or over) , we will need to take

mat ion your future deductions from your net pay to

i n f o r re ab
out
ensure your salary remains compliant with
More e to find outu have any efits
m o
this legislation. Please note, you will lose
ud l
ik r yo ben day
If yo c r i f ice o ntact the Mon
some or all of the tax and all of the NI savings
y S a c o 0 0 5
Sala
r se 0 that you were previously benefitting from.
plea 8202 ail
e s t ions o n 023 or em .uk
qu s k p m
help
d e 5.3 0 in.co
box . 3 0 am - n e f i t adm
ay, 8 @be
- Frid efitsbox
en
theb