Salary sacrifice - employer view

Mick70

Does it create much more workload / admin from an employers viewpoint .
Apart from informing payroll provider of the new staff monthly salary sacrifice  deductions and the revised employer pension payments .   And then the employer has to pay the combined amount each month to the pension provider .
is there anything else to consider .
does it impact any annual returns (P11d employee benefits or anything ?)
Thanks
mick 

MX5huggy

The employer saves employer NI contributions. They can choose to pass these on or keep them themselves, as my employer does, this should offset any perceived additional costs.

There’s the complication of different staff having different pension. They can’t use SS with staff at or near the minimum wage, because you can’t SS below minimum wage, even to buy a bike on cycle to work. 

Mick70

I’m more wondering if it generates more admin come year end and returns to tax man or anything - solely from employer perspective 

Linton

The cost could be that of implementing the change. For example modifying or replacing payroll software, new procedures for the staff etc.

dunstonh

Does it create much more workload / admin from an employers viewpoint .

No.   I run ours on salary sacrifice.      The pension provider gives the choice of Salsac or conventional, and you allocate the employee to the method once.   All future ones use that method until you change it again.   Then you notify the payroll provider of the method being used.

Apart from informing payroll provider of the new staff monthly salary sacrifice  deductions and the revised employer pension payments .

No.  The payroll provider calculates the deductions.  The employer just gives the gross pay figure.

 And then the employer has to pay the combined amount each month to the pension provider .

And that is collected by direct debit. 

does it impact any annual returns (P11d employee benefits or anything ?)

No.  Although there is a check on that, if you do not have your salary taken down below minimum wage.


Mixing and matching staff on the different methods is possible but the payroll provider may charge more for it and the employer may be wary of doing that as it could become messy.

Marcon

Mick70 said:

Does it create much more workload / admin from an employers viewpoint .
Apart from informing payroll provider of the new staff monthly salary sacrifice  deductions and the revised employer pension payments .   And then the employer has to pay the combined amount each month to the pension provider .
is there anything else to consider .
does it impact any annual returns (P11d employee benefits or anything ?)
Thanks
mick 

One of the major issues it creates is one of communications. You only have to look on this forum to see how many people are wholly baffled by the idea, asking anxiously if it's in their interests, is it a scam or similar, even where the employer appears to have done their best to explain the idea. It also creates issues in terms of other benefits such as life cover - is that pre or post sacrifice levels?

I've seen several employers simply throw in the towel because the hassle of dealing with endless employee queries and suspicion outweighs the NI saving, which is a huge shame for everyone concerned.

penners324

It's easier to run payroll in house. Decent payroll systems can easily cope with and even link to the pension administrator, so the system does it automatically.
Have found external payroll providers cause more hassle than they're worth.

[Deleted User]

Jumping on @Mick70 ' s post (hope you don't mind).
I'm considering rolling out salary sacrifice to more employees, as it's at the point where wage increases are being swallowed up by taxation.
Is there a website / online calculator / tables which show the 'optimum' levels to minimise employer/employee taxation costs?
Or do I need a spend a few hours working through different scenarios to see which are the most efficient for us?

MX5huggy

I don’t think you need to think about it too much, it’s a win win (for employers and employees) and a loss for the tax man in virtually all cases. 

The one possible looser (because you can’t sacrifice below National Minimum Wage) is the part time employee that earns a hourly wage above NMW but earns less per year than the basic rate tax threshold they should not use SS, they would better making normal contributions because they get the tax relief even if they’ve pay no tax. 

Real winners are those at £50000 plus with children they can get their Child Benefit back if the SS back to £49999. 

Do you have employees in the additional rate? 

Albermarle

[Deleted User] said:

Jumping on @Mick70 ' s post (hope you don't mind).
I'm considering rolling out salary sacrifice to more employees, as it's at the point where wage increases are being swallowed up by taxation.
Is there a website / online calculator / tables which show the 'optimum' levels to minimise employer/employee taxation costs?
Or do I need a spend a few hours working through different scenarios to see which are the most efficient for us?

One issue is that AFAIUI, you have to get the employees to officially agree to it as it is change in their employment contract. As mentioned in a previous post, although it is a clear benefit for them, they may still struggle to understand that and just refuse to agree.

liz_bartun

Another issue is if an employee wants to apply for a mortgage, the lower, post-sacrifice salary is the one that is used. Also the higher rate statutory maternity pay is based on post sacrifice pay.