1. What is Salary Sacrifice?

Salary sacrifice is an arrangement where an employee gives up part of their salary in exchange for non-cash benefits. Legal & General offers salary sacrifice schemes that can provide tax and National Insurance savings.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Gross\ Pay \) — Total salary before deductions
• \( Income\ Tax \) — Amount deducted for income tax
• \( National\ Insurance \) — Amount deducted for NI contributions
• \( Salary\ Sacrifice \) — Amount sacrificed for benefits

Explanation: The calculator shows your take-home pay after accounting for standard deductions plus any salary sacrifice arrangements.

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can reduce your income tax and National Insurance contributions while providing valuable benefits like pension contributions, childcare vouchers, or cycle-to-work schemes.

4. Using the Calculator

Tips: Enter your gross annual salary, estimated income tax, National Insurance contributions, and planned salary sacrifice amount. All values must be in GBP.

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice right for everyone?
A: No, it depends on individual circumstances. Those near National Insurance contribution thresholds or certain benefit entitlements should seek advice.

Q2: How does salary sacrifice affect my pension?
A: Pension contributions through salary sacrifice are typically more tax-efficient, but may affect calculations for mortgage applications.

Q3: Can I change my salary sacrifice amount?
A: Usually only at certain times of year or with life events (e.g., marriage, birth of child). Check your employer's policy.

Q4: Does salary sacrifice affect my statutory pay?
A: Yes, it may reduce statutory maternity/paternity/sick pay as these are based on your reduced salary.

Q5: Are there limits to salary sacrifice?
A: Yes, your pay after sacrifice must not fall below the National Minimum Wage.