How B4 members could benefit from Salary Exchange before National Insurance Contributions increase
Sarah Herd, Head of Workplace, Wren Sterling
Back in October at the Budget, not only did the Chancellor announce plans to increase the rate on Employer National Insurance Contributions (NIC) from 13.8% to 15% in April 2025, she also confirmed the minimum threshold for applying this tax will reduce from £9,100 to £5,000 pa.
The Institute for Fiscal Studies says the increases in employer National Insurance means that employers will have to pay an additional £900 for each employee on median average earnings (around £33,000 pa).
Businesses are now scratching their heads on how to accommodate these increased costs. Restricting future salary increases, curbing recruitment and passing the costs onto its clients are all options which have been mentioned in the media, but each of those options seem unfair to employees or customers.
But one option available to employers to mitigate some of these costs is Salary Exchange. It can reduce your NIC bill (and that saving is more significant now the rate is going up) but it can also help the higher earners in the business with their tax planning.
Some are put off by the thought of perceived additional administration for their payroll, or the disruption to the business as you go through this change. However, if implemented correctly by an expert, you shouldn’t see any additional administration and it can lead to a more engaged workforce and higher employee contributions. Which in turn leads to even higher Employer NIC savings.
Get Salary Exchange into your business
Wren Sterling has been advising businesses of all shapes and sizes for many years in on Salary Exchange; the different ways you can roll this out along with providing a comprehensive communication program for your employees, so they understand what this is, and its benefits. In fact, since the Budget, Wren Sterling has seen an increase in the number of companies actively seeking advice from us on this topic.
If you don’t operate Salary Sacrifice, and are now tempted to consider this, we can help get you going with just a 30-minute consultation.
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