The UK Cost of Living Crisis: Maximising income during the big squeeze

Amba 16th May 2022

With national insurance contributions on the up, employees across the UK are facing a serious cost of living crisis that is only poised to deepen as inflation, energy, and water bills continue to soar. This reduction in spare money is also affecting saving, with 54% of people citing rising living costs as the main reason for reducing savings.

There may be ways your teams can individually reduce their outgoings, but how can you help them to boost what’s going into their accounts even further?

Salary Sacrifice could be a quick win

The current rise in national insurance contributions means a worker earning £30,000 a year will see their take-home pay fall by £17 a month, or £214 a year, while someone earning £50,000 will lose £38 a month, or £456 a year.

However, you may be able to soften the blow of this increase by implementing a salary sacrifice scheme across some of your employee benefits.

What is salary sacrifice?

Salary sacrifice reduces the amount of national insurance both you and your employees pay. It’s often used as a way of funding pensions or employee benefits to make savings, as the payment is taken from gross salary before tax & NI are applied. The lower the gross income, the less your employees will pay in income tax and national insurance contributions, often leaving them much better off.

How can I implement it into my business?

There are plenty of employee benefits that can be paid for through salary sacrifice, and plenty of them would also significantly help when it comes to tackling the cost of living crisis.

You could implement a salary sacrifice Cycle to Work scheme or electric/ultra-low emission car scheme to allow your teams to travel at a lower cost – both commonly implemented with salary sacrifice in place. However, the most common way of implementing a salary sacrifice scheme is via your employee’s pension contributions.

Can we help?

Whether you have an existing employee benefits scheme, or are looking to put one in place, we can help!

We have a wealth of experience in the salary sacrifice and employee benefits field, and would be happy to chat to you about how our benefits platform Lumina could help your business.

Book a demo