Photo by Vitaly Gariev on Unsplash
Employee benefits once used to refer to a pension, some healthcare and a fruit bowl on your desk.
Not anymore.
Employees today demand more. They want benefits that save them money. Which is why salary sacrifice schemes are totally smashing it at the moment.
The coolest thing? These plans save employers AND employees money simultaneously.
A salary sacrifice scheme is pretty simple.
An employee sacrifices a portion of their gross pay. They receive a non-cash benefit provided by their employer, in return. Examples include pension contributions, an Electric Car Scheme, cycle-to-work bikes or nursery vouchers.
Why does this matter for employee benefits?
As it is taken from gross earnings - BEFORE - income tax and National Insurance contributions are worked out.
One of the few ways HMRC will actually allow you to keep more of your hard earned cash.
And it's blowing up.
Latest figures found only 7% of employers offered salary sacrifice schemes in early 2025, rising to 36% in early 2026. Such a significant increase in a year.
Something is clearly working here...
Salary sacrifice delivers multiple benefits in one neat package. Here are some reasons why HR professionals love them.
Let's talk numbers.
If an employee gives up salary in exchange for a benefit they are not simply trading money for goods. They are releasing tax and NI savings they would otherwise be unable to access.
A basic rate taxpayer will typically save around 28p for every pound they donate. Higher rate taxpayers will save approximately 42p for every pound donated. Taxpayers with an income that falls into the £100k Personal Allowance taper will be able to save as much as 62p on every pound donated.
Try beating that with a "free birthday off" perk.
Employers save on NI contributions on every sacrificed pound. That adds up fast.
Salary sacrifice pension contributions actually save employers money. For every employee on £50,000, employers can save £345 a year. That's over £86k back into your business per year on a staff of 250.
For companies dealing with rising employment costs, that's serious money.
Here's the kicker...
Employees these days are no longer content with just a salary. They want benefits that count. Salary sacrifice schemes allow employers to offer high-value perks without breaking the bank.
Gallup's State of the Global Workplace report reveals that employee engagement levels in the UK were only 10% in 2025, significantly lower than the European average of 12%. Employee engagement is broken – and organisations need a new solution.
Salary sacrifice schemes are exactly that kind of tool.
Salary Sacrifice isn't all the same. Some schemes are huge. Others less so. Let's review some of the popular ones.
This is the biggest one by a mile.
Rather than contributing to a pension from net pay, you sacrifice gross salary and the employer pays that amount directly into your pension. The end result is the same amount ends up in the pot, less tax and NI have been paid.
Research conducted by Towergate Employee Benefits discovered that 48% of employers run salary sacrifice arrangements on their pension schemes. Nearly half of businesses in the UK.
Why is it so popular?
Cool right?
EV salary sacrifice schemes are the fastest-growing employee benefit in the UK right now.
Here's why they matter:
Staff take home-drive a brand new electric vehicle and pay for it out of gross salary. They save 30-60% over private leasing. Insurance, MOT, maintenance and breakdown cover – all included in one monthly payment.
62% of employees surveyed said they wouldn't move to an employer who doesn't offer a salary sacrifice car scheme. Wow.
For businesses trying to attract top talent, this is quickly becoming a must-have.
The classic salary sacrifice benefit that has been running for years.
Employees receive a new bike (up to an amount) which they purchase against gross salary. Perfect for employees looking to reduce their commuting expenses whilst exercising.
Working parents love this one.
Staff contribute some of their wages to nursery fees. Cuts childcare costs enormously. Especially if you're a higher rate taxpayer who are forking out a fortune every month for nursery fees.
Salary sacrifice can be available on laptops, phones and work technology from some employers. This isn't as common as the others, but is becoming more popular with remote workers.
If you're an employer today, you should not be ignoring salary sacrifice. Here's why…
Competitive pay is no longer enough on its own.
Employees are starting to evaluate benefits packages the way they once evaluated salaries. Employers with purposeful perks are gaining ground when it comes to recruiting. Those without meaningful benefits? They're slowly losing their talent to employers who will.
Employer NI contributions are now 15%, so employers are scrutinising where they can make savings. Salary sacrifice schemes reduce NI liability, without reducing headcount or removing benefits.
It's a rare win-win.
Salary sacrifice schemes are also good news for employers helping them to meet their sustainability goals. (EV schemes in particular.) This is becoming increasingly important as Environmental, Social and Governance (ESG) reporting becomes ingrained in day to day business.
Employees also want to feel like they work for companies that care about climate change. Offering an EV scheme is a tangible sustainability benefit that helps fulfil that.
Salary sacrifice providers these days take care of pretty much everything. They'll set up the scheme, manage payroll integration and deal with the compliance aspects. Employers can run a scheme with next to no effort.
Salary sacrifice schemes are the unsung hero of employee benefits. Offering good tax efficient benefits that employers can save money on, use to attract and retain talented employees and provide employees with benefits that really enhance their everyday lives.
Quick recap of why they're winning:
The regulations may change (there's a £2k pension cap incoming 2029) but the principle remains. Sacrifice salary for perks that benefit you both financially.
Businesses that hop on this now will win. Those who don't will be left scrambling to offer benefits no one cares about.
The choice is pretty clear.
Discover our other works at the following sites:
Danetsoft is a global web agency headquartered in Indonesia, specializing in web development, managed hosting, and web publishing platform.
[email protected]
Magelang, Central Java © 2026 Danetsoft. Powered by HTMLy
