• Skip to main content
  • Skip to footer
SBCA Chartered Accountants

SBCA Chartered Accountants

Chartered Accountants in Preston

Call Us Now 01772 204102

  • Facebook
  • LinkedIn
  • Twitter
  • Accountancy & Tax
  • Business Growth
  • Private Wealth
  • Who We Help
  • About
  • Our Team
  • Client Testimonials
  • Contact
  • Client Login

What is a salary sacrifice?

19th September 2013 by Chris Bond

A salary sacrifice is a voluntary reduction in your salary in exchange for tax-free benefits. These benefits can include:

• Child care vouchers
• Cycle to work schemes
• Bus passes for commuters
• Canteen tokens
• Staff car parking and vouchers


The Government have also launched a consultation into the promotion of payroll giving. The aim is promote the system that allows monthly charitable donations to be taken from your salary before tax and National Insurance are deducted.


Ironically, the higher your income, and therefore your marginal tax rate, the less you will have to contribute to achieve the same result. For example:


1. If you pay income tax at 20%, and want to contribute £20 a month to a charity you would have approximately £16 stopped from your salary.
2. If you pay income tax at 40% and want to contribute £20 a month to a charity you would have approximately £12 stopped from your salary.
3. If you pay income tax at 45% and want to contribute £20 a month to a charity you would have approximately £11 stopped from your salary.
You could also use a salary sacrifice arrangement to reduce your taxable income if it seems likely that it will break through a significant tax threshold. For example:
• If your income is about to exceed £100,000 you will lose your personal tax allowance at the rate of £1 for every £2 your income exceeds £100,000.
• If your salary, or that of your partner, is about to exceed £50,000 you may lose entitlement to some or all of Child Benefit you may receive.
• You could also use salary sacrifice to keep your income below an increase in a tax band rate: from 20% to 40% or 40% to 45%.


It is important to crunch the numbers before you approach your employer so that you can quantify the benefits.
 

Category iconUncategorized

Xero Gold Partners
ICAEW Chartered Accountants
Clear transparent pricing champions

Footer

Get Your Free Copy of Chris’s Book

Reflect Dream Do

Quick Links

  • Get in touch
  • Book Your Discovery Call
  • Client Testimonials
  • Blog
  • Meet Our Amazing Team
  • Work for us
  • Time. Money. Headspace.

Get Your Free Tax Planning Checklist

Business Tax Planning Checklist

Join The Preston Business Community

Preston Business Community

The Latest From Our Blog

Tax Time

Tax Time – Dates for May 2022

21st April 2022 By Chris Bond

THE UPS AND DOWNS OF SPRING STATEMENT 2022

The ups and downs of spring statement 2022

24th March 2022 By Chris Bond

Tax Time

Tax Time – Dates for April 2022

21st March 2022 By Chris Bond

Read more from the blog

We use telephone tracking numbers to link a user’s call to the marketing channel that they originated from. This is done using cookies, you can choose to decline cookies using your browser settings if you would prefer not to be tracked. We may record calls for training or monitoring purposes.

This firm is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide.

Copyright © 2022 SBCA Chartered Accountants · Privacy Policy · Terms & Conditions · Site Design by Simply Smarter Marketing