Salary Sacrifice Schemes

Alison69

My brother has just been presented with a salary sacrifice scheme by his employer. At present he pays annually for a parking permit, due for renewal in his case in July. He has just paid for the forthcoming year £113). Today he has been sent a document saying that from November unless you opt out you will be enrolled into a salary sacrifice scheme. On the face of it he will probably be slightly better off in respect of tax and NI. However, there are two main questions. Firstly as he has just paid in advance for the coming year to end of June 2009 can they drop his pay from November as this will mean he is paying in advance twice. Secondly if he agrees to this and then no longer requires a parking permit in say a years time, will his pay revert to the former amount. If not surely this is effectively a pay cut through the back door.

Your fast advice would be extremely welcome. He certainly cannot afford to pay a lump sum now and then have his pay dropped in the same year.

Alison69

Has nobody got any help or advice for my query? I don't know where else to go for advice now.

MX5huggy

No one can help you because it is between him and his employer he needs to ask the employer to clarify the terms and conditions.

Alison69

Perhaps I didn't word my original message well enough. I can find plenty of information about salary sacrifice schemes with regard to pensions but not for my brother's situation.

Effectively if he doesn't join he doesn't get a parking permit and therefore cannot get to work. If in the future his circumstances change and he can walk to work, etc and doesn't need the permit, is it legal for his pay not to be put back up to the original level. There is no problem with the scheme itself as tax wise he would be better off, however he is effectively being given no choice in how to pay for the permit (at the moment he pays by debit card) and if his money is not put back to the original level this is effectively a pay cut as more like blackmail.

mvteng

My wifes Salary Sacrifice scheme allows her to review & change at the same time every year.

My Salary Sacrifice scheme is set up for the length of my employment although I may add additional salary sacrifices, but not reduce what I have already agreed to.

Really your brother needs to find out from his employer as all schemes will not be the same.

Debt_Free_Chick

Alison69 wrote: »

Perhaps I didn't word my original message well enough. I can find plenty of information about salary sacrifice schemes with regard to pensions but not for my brother's situation.

Effectively if he doesn't join he doesn't get a parking permit and therefore cannot get to work. If in the future his circumstances change and he can walk to work, etc and doesn't need the permit, is it legal for his pay not to be put back up to the original level. There is no problem with the scheme itself as tax wise he would be better off, however he is effectively being given no choice in how to pay for the permit (at the moment he pays by debit card) and if his money is not put back to the original level this is effectively a pay cut as more like blackmail.

As another poster suggested, your brother has to put his questions to his employer. Salary sacrifice is a "private" arrangement between an employer and an employee, so his employer sets the terms of the scheme and what happens, when.

Are you sure he's going to be better off tax-wise? Won't the parking permit be taxed as a benefit in kind?

Has he shown you all the information that the employer has provided?

Angel89_2

WHy not just use public transport and so not need to park at all??

Alison69

Thanks for the input. I have seen the documentation and basically the information he has been given I put in the email. They are not renowned for being helpful of forthcoming with infor. I will certainly list some specific questions for him to ask with regard to salary returning to the original level. The concern is if they say no it seems extremely unfair to say it's that or nothing.

Unfortunately public transport is not an option. He has equipment to transport which excludes the only public transport in Bath, the bus. He would be perfectly happy to continue paying as he does at present by debit card or cheque each year but they aren't giving that option. It isn't a payment in kind if it is a salary sacrifice scheme.

Ama

Alison69 wrote: »

Thanks for the input. I have seen the documentation and basically the information he has been given I put in the email. They are not renowned for being helpful of forthcoming with infor. I will certainly list some specific questions for him to ask with regard to salary returning to the original level. The concern is if they say no it seems extremely unfair to say it's that or nothing.

Unfortunately public transport is not an option. He has equipment to transport which excludes the only public transport in Bath, the bus. He would be perfectly happy to continue paying as he does at present by debit card or cheque each year but they aren't giving that option. It isn't a payment in kind if it is a salary sacrifice scheme.

I will echo what others have said about examining the terms and conditions of the scheme. Employers often allow employees to opt out of salary sacrifice arrangements when life changing events occur. Employers make a saving on NI contributions when employees enter into salary sacrifice arrangements. This could be the reason why they are insisting that everyone who has a parking permit joins the scheme.