Salary Exchange

Salary Exchange (sometimes referred to as Salary Sacrifice) is a mechanism which enables employees to forego future salary on the agreement that the values given up are paid as additional employer pension contributions. This method provides savings in both types of National Insurance (Corporate and Personal) and provides employees with immediate income tax savings at their highest rate.

The table below indicates the savings that can be achieved based on an employee exchanging 4% of their salary for Pension contributions.

Gross Salary	£30,000	£60,000	£110,000
Salary ‘exchanged’ (at 4%)	£1,200	£2,400	£4,400
Corporate National Insurance saving	£180.60	£361.20	£662.20
Personal National Insurance saving	£159	£78	£143
Personal Income tax saving	£240	£960	£2,640
*Total amalgamated saving*	*£579.60*	*£1,399.20*	*£3,445.20*

Figures correct as at March 2021 (and are subject to Government budgetary changes).

If you would like to discuss more about Salary Exchange or see how our interactive employee calculator can help you and your employees, please contact Nick Young at nyoung@jmurray.co.uk

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