Is Salary Exchange/Sacrifice good for low earners?

A company should consider carefully the impact of a salary sacrifice scheme if it has a majority of low earners. If employees are currently on a relief at source scheme, they will be able to claim back 25% of their contribution from the Government. However, many low earners will not be eligible for a salary sacrifice scheme as the post-sacrifice salary cannot be lower than the National Minimum Wage, currently at £11.44 for those over 21. The employer has no obligation to keep lower paid employees on the old scheme but they may wish to do so.

Updated on: 16/04/2024