From April 6 2025, National Insurance Contributions (NICs) for employers will increase, whilst the earnings threshold at which they need to start paying National Insurance is lowering.
These changes will mean higher deductions within the payroll for contractors and give a renewed importance to salary sacrifice pensions. This can help offer savings and a tax-efficient pension boost for contractors. Your contractors may not have considered salary sacrifice before, but now could be the perfect time.
What is salary sacrifice?
Salary sacrifice, also known as ‘salary exchange’, is an arrangement between a business and its employees, under which an employee agrees to exchange part of their salary equal to the amount they want to contribute to their pension. The business will then pay this amount, plus their own contribution, before tax, directly to the employee’s pension savings.
How can salary sacrifice benefit umbrella companies and your contractors?
Salary sacrifice brings savings and benefits for your contractors through tax efficiency meaning they’ll pay less in NICs and tax each payroll.
At Smart Pension, with the help of businesses like yours, we’ve helped contractors achieve meaningful savings with this straightforward approach. While not all pension providers offer it, we believe salary sacrifice is one of the most effective ways to cut costs and boost contractor benefits at the same time.
Interested in finding out more?
Get in touch with Smart Pension today and see how we can help enhance your pension offering.
Email fcsa@smartpension.co.uk or call 0330 1247 409
