Reduction in NI = reduction in employee salary sacrifice benefit

psimonparsons

Nov 23

With the governments Autumn Statement reduction of 2% in the standard rate of National Insurance Contributions from the current 12% to a new 10% from 6th January 2024, it's all good news for those who pay National Insurance.

Salary Sacrifice arrangements have remained popular with employees often able to benefit by the reduction of the primary NIC 12%. High earners the 2%. this provided a perceived discount to the net cost of the benefits provided.

With the reduction to 10% then there is a salary sacrifice benefit saving loss equal to the drop. So for many that are part of salary sacrifice benefit schemes, there will be a potential increase cost (or loss of NI savings) of 16.7%.

So the pension salary sacrifice, or the bike, childcare or tech scheme perceived saving benefit will reduce.

Employers will also need to consider whether their salary sacrifice schemes will be impacted by the rise to National Minimum and National Living Wage. Will more employers face NMW breach. Review is essential especially where earnings are close to minimum pay levels.

PAYadvice.UK 23/11/2023