Husky Finance

SALARY EXCHANGE, ALSO KNOWN AS SALARY SACRIFICE

Why is setting up Salary Exchange
such a great idea?

It allows you and your employees to save on National Insurance contributions, putting more money in their pockets each month and increasing cash savings for your business.

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Salary Exchange
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.

Calculate your savings

Your company and employees can save thousands each year. These significant savings can cover Husky’s fees, creating a win-win situation for everyone involved.

How it works?

Register

Only takes 2 mins

Get scheme access

Delegate access of your existing scheme (or you can move provider if you prefer)

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Salary Exchange

We implement Salary Exchange together with an app-based process so you can start saving

Pricing to suit business of all sizes

Less hassle and lower costs for you now and more benefits for your employees later.

1-3

Employees

From

£25

price/month

4-9

Employees

From

£35

price/month

10-19

Employees

From

£48

price/month

20-49

Employees

From

£96

price/month

50+

Employees

For organisations with over 50 employees, a customised and detailed approach is essential.

Over 2,000 employers save time and money with Husky.

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Watch the video
to learn more

Gain some valuable insights

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National Insurance Cut 2024. Essential Insights.

The National Insurance (NI) will be reduced for both employees and the self-employed in 2024, marking the second cut this year. The recent announcement in..

Why business owners can’t ignore Salary Exchange in 2024

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Award-winning solution

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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.