Your employees may consider salary sacrifice in order to advance their skills through training. Why should you as an employer consider it?
Salary sacrifice may not be suitable for all your employees and you should familiarise yourself with the potential drawbacks.
Salary sacrifice could affect an individual's current or future entitlement to a range of State benefits, including the receipt of tax credits.
If any employees' earnings fall below the Lower Earnings Limit, they won't be eligible for:
- Statutory Sick Pay
- Statutory Maternity Pay
- Incapacity Benefit
- Jobseeker's Allowance (although means-tested benefits may still be claimed)
- State Second Pension benefits will be reduced
If your employees have not paid enough NIC on their income, basic state pension may also be reduced on retirement.
Salary sacrifice should not reduce your employee's cash pay to below the National Minimum Wage.
Other possible impacts on your employees are on borrowing levels, such as mortgage borrowing, credit card and personal loan limits, Income Protection Insurance benefits and redundancy entitlements.
This document is designed only to highlight that a salary sacrifice scheme may be a potential option to consider when booking training courses through Reed Business School. This document is not providing tax or legal advice and it is the responsibility of the employer to ensure that any salary sacrifice scheme complies with HM Revenue and Customs guidelines.