Salary exchange - a better way to save
Salary exchange gives you an ideal opportunity to add value to your clients and increase your remuneration. It's an easy, efficient way to improve an employer's benefits package.
It can also provide you with a powerful opportunity to drive home the importance and increased value of the work-based pension scheme alternatives to the National Employment Savings Trust (NEST).
Salary exchange may not be suitable for everyone. We recommend your clients get professional advice if they need more information on salary exchange.
What is salary exchange?
It’s an arrangement where employees agree to give up some salary or bonus. The amount given up is used by the employer to provide a non-cash benefit to the employee.
As the employee is being paid less gross salary the employer makes National Insurance Contribution (NIC) savings and the employee pays less tax and NICs.
- Employers save on their NIC bill
- Employees save on tax and NICs
- Reinvesting these savings in a pension plan may give employees a bigger retirement fund
- This gives you an ideal opportunity to add value to your clients and increase your potential remuneration
How we can help?
- Calculator – work out the savings and produce individual employee statements
- A guide to salary exchange – details of how salary exchange works, includes a step by step guide on how to set up a salary exchange arrangement and the opportunities it presents
- Employee guide and personal calculator - showing employees the benefits of using salary exchange
- General questions about salary exchange - covering common questions on salary exchange, how it can be set up, and its effect on state and other employee benefits
If you have a question that we haven’t covered, you can e-mail us and we’ll do our best to find out the answer and let you know. We may also update our Questions and Answers.
You can also contact your usual Scottish Life representative for further information.
Last update April 2013
- Retirement Solutions - Defined Contribution
- Salary sacrifice and the effect on State benefits
- Maternity leave and salary sacrifice
- National Minimum Wage
- HMRC’s Q & A
- HMRC information on salary sacrifice
For professional advisers only