SALARY EXCHANGE, ALSO KNOWN AS SALARY SACRIFICE

Why is setting up Salary Exchange
such a great idea?

Your staff can adjust their take-home pay, incurring less NI, leaving more money in their hands, month after month. Your company will also pay lower NICs and Corporation tax. It’s a win-win for both employers and staff.

salary exchange husky benefits

We used these parameters for the scenario above: 50k average salary – PPS1 – 5% employee contributions – 30 workers – 50% NI re-investment.

Husky's technology advantages

95% of small businesses are not taking advantage of the opportunity to save money for their staff and their firm via Salary Exchange, despite 99% of big companies doing it, mainly due to challenges like complexity, lack of knowledge, and high compliance costs.

Husky’s industry-disrupting technology automates the solution for all businesses, ensuring easy, cost-effective and compliant Salary Exchange implementation.

Automated process

The Husky App streamlines agreements, it saves time on drafting and signing—no need to change contracts or involve a solicitor. Manage pension changes directly in the app, emphasising it’s an ongoing solution, not just a one-off.

Ensure compliance

We handle setup, administration, and ensure compliance without incurring Independent Financial Advisor (IFA) costs.

Qualifying earnings

Husky is one of the only providers that can set up Salary Exchange schemes based on Qualifying Earnings (which is used by most SMEs)

Payroll management

Husky streamlines payroll changes, reducing administrative coordination efforts, and can even run your payroll.

Discover John and his employer's real-life savings journey

Before the switch to Salary Exchange:

  • John’s gross annual salary: £35,000
  • John’s annual pension contribution: £1,438
  • Employer’s annual pension contribution: £862
  • Total annual contributions: £2,300

With the switch to Salary Exchange:

Employer’s potential savings:

  • Up to £198 on employer’s National Insurance
  • Up to £273 on corporation tax

John’s potential benefits:

  • Up to £173 more in his take-home pay
  • Up to £198 more in his pension pot (depending on whether you, as the employer, reinvest all or part of the above National Insurance savings into the employee’s pension pot)


Default

After Exchange

Saved

Gross Salary

35,000

33,562

Income tax

-4,486

-4,198

Employee NIC

-2,692

-2,519

Take-home net pay

26,672

26,844

173

Employer NIC

3,574

3,376

198

Employee Pension Contribution

1,438

Employer Pension Contribution

862

2,300

Total Pension contribution

2,300

2,300

Calculate your savings

See how implementing salary exchange can positively benefit your company and workers.

Pricing to suit business of all sizes

Thanks to Husky’s tech, the savings from salary exchange cover the fees. This win-win aligns with Husky’s goal – making a better future and effortless savings accessible to all in the UK.

1-3

Employees

From
£25
Monthly
  • Setup fee £50

4-9

Employees

From
£35
Monthly
  • Setup fee £50

10-19

Employees

From
£48
Monthly
  • Setup fee £100

20-49

Employees

From
£96
Monthly
  • Setup fee £200

50+

Employees
  • For organisations with over 50 employees, a customised and detailed approach is essential.
From
£25 Monthly
1-3 Employees Setup fee £50
Select Plan
From
£35 Monthly
4-9 Employees Setup fee £50
Select Plan
From
£48 Monthly
10-19 Employees Setup fee £100
Select Plan
From
£96 Monthly
20-49 Employees Setup fee £200
Select Plan
50+ Employees
or organisations with over 50 employees, a customised and detailed approach is essential.
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Simple steps to get started

Onboarding call

Book a call for a smooth Salary Exchange Pension setup. Learn how it works and discuss timelines and communication with our team.

 

Delegate access

Simply let us know your current pension provider, and we’ll send a straightforward guide on granting us delegate access to the scheme.

Go live

Employees can now request and sign the agreement directly from the Husky app and the employer only has to accept it online. That’s it!  

Husky's journey

husky journey
se review 1
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Watch the video
to learn more

Play Video about husky-mobile-app-salaryexchange

Gain some valuable insights

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Award-winning solution

Best-Workplace-Pension-Compliance-Solution
husky award 2023

Here are 7 frequently asked questions about Salary Exchange

If you have more questions you can always access our knowledge base on this link

As the employee’s gross earnings are reduced, the employer also saves on their National Insurance Contributions (NIC).

Those savings can be re-invested into the employee’s workplace pension pot to provide an even better employee benefit and encourage them to join.

With Husky, you can also split those savings into specific %s so you can share the savings between the company and the employee.

Salary Exchange is an agreement between the employee and the employer. The employee's contract of employment is altered to reflect that they have agreed to exchange part of their future gross salary or bonus entitlement in return for a non-cash benefit, such as an employer pension contribution.

What are the benefits of a Salary Exchange scheme?

  • Employers save on NI contributions while employees can save on tax as well as NI contributions.
  • Employers can reinvest any NIC savings in their business or their employees’ pension plans.
  • Employees receive a higher pension contribution or take-home pay, depending on how the arrangement’s set up.
  • Employees can benefit from a bigger retirement fund, if NIC savings are reinvested back into their plan.

Are there any possible drawbacks to a Salary Exchange scheme?

  • Lower life cover (employers generally calculate entitlement as a multiple of salary which would be lower)
  • Lower borrowing available on mortgages (as per life cover the borrowing level is determined by a multiple of a lower salary)
  • Entitlement to state benefits eg Statutory Maternity Pay and the State Pension may be affected if your salary falls below the level at which you pay National Insurance contributions.
  • The employee might not be able to revert to their old (pre-sacrifice) salary if personal circumstances change. The employer would have to agree to a further change to the employee's contract of employment.

Those savings can be re-invested into the employee’s workplace pension pot to provide an even better employee benefit and encourage them to join.  With Husky, you can also split those savings into specific %s so you can share the savings between the company and the employee.

A salary exchange agreement can normally be altered, for example, if someone opts out of an automatic enrolment scheme with salary exchange.

For any other circumstances, it depends on how the agreement has been set up. It may be necessary to change the terms of a salary sacrifice arrangement where a lifestyle change significantly alters an employee’s financial circumstances.

This may include:

  • changes to circumstances directly arising as a result of coronavirus (COVID-19)
  • marriage
  • divorce
  • partner becoming redundant or pregnant

What are the benefits of a Salary Exchange scheme?

  • Employers save on NI contributions while employees can save on tax as well as NI contributions.
  • Employers can reinvest any NIC savings in their business or their employees’ pension plans.
  • Employees receive a higher pension contribution or take-home pay, depending on how the arrangement’s set up.
  • Employees can benefit from a bigger retirement fund, if NIC savings are reinvested back into their plan.

Are there any possible drawbacks to a Salary Exchange scheme?

  • Lower life cover (employers generally calculate entitlement as a multiple of salary which would be lower)
  • Lower borrowing available on mortgages (as per life cover the borrowing level is determined by a multiple of a lower salary)
  • Entitlement to state benefits eg Statutory Maternity Pay and the State Pension may be affected if your salary falls below the level at which you pay National Insurance contributions.
  • The employee might not be able to revert to their old (pre-sacrifice) salary if personal circumstances change. The employer would have to agree to a further change to the employee's contract of employment.

Those savings can be re-invested into the employee’s workplace pension pot to provide an even better employee benefit and encourage them to join.  With Husky, you can also split those savings into specific %s so you can share the savings between the company and the employee.

You should speak to your tax credits office before you decide whether to participate in a Salary Exchange Scheme. You must also notify your tax credits office once you have exchanged your salary.

However, in broad terms, as your gross salary reduces (and employer pension contributions are disregarded) your entitlement to tax credits may increase. If you currently make personal contributions to a pension scheme, then you are currently entitled to deduct the gross amount of the pension contribution from your earnings to calculate your tax credits. In this situation, therefore, there should be little or no change to your tax credits entitlement.

Yes, salary exchange can be introduced into an existing plan as well as new plans.

Leaving a salary sacrifice exchange is always an option, and you should be able to do so without penalty if the arrangement isn’t working for you.

Joining salary exchange is an employee’s choice and therefore an employee can not be forced to opt into a salary exchange (salary sacrifice) scheme. Using salary exchange together with Auto-Enrolment means that if someone hasn’t signed the agreement they still need to be enrolled and therefore make their contributions as currently. As an employer, you can have two sets of employees: one set in the scheme without Salary Exchange and contributing normally and the second in the scheme with Salary Exchange where the contributions are all made from the employer. Some employers automatically include new employees in salary exchange (through their contract of employment) while allowing them to opt out of Salary Exchange if they wish.