Tax advice of the week: Sacrifice your salary
With benefit cuts for higher-earners and rising national insurance contributions, you might want to consider lowering your taxable pay by 'buying' perks from your gross salary.
National Insurance contributions on most employees' earnings rise from 11% to 12% next April and for those earning more than £43,888 a year from 1% to 2% on everything above that. So consider what you can "buy direct from your gross salary", says Ian Cowie in The Daily Telegraph.
Top-up pension payments are an obvious, but by no means only, use of salary sacrifice. Salary sacrifice can also buy childcare vouchers, lease cars for yourself and family members, and pay for medical insurance, or even a holiday.
Fathers and mothers are each eligible for childcare vouchers worth up to £2,916 a year. These can fund not only nursery care, but pre- and post-school club fees and summer camps, says Tony Nevin of benefits consultants Serenity (who also points out that higher-rate payers should register before next April, as those who register afterwards will be restricted to vouchers worth £28 per week rather than £55).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Alternatively, why not just buy yourself an extra week's holiday from your employer? suggests Richard Mannion of Smith & Williamson.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Revolut finally bags a UK banking licence – what's next for the fintech?
Revolut has finally been granted a UK banking licence following three years of negotiations with the regulator
By Kalpana Fitzpatrick Published
-
Could Labour impose a “double death tax” of more than 50%?
Speculation is mounting that capital gains tax will be reformed in the Budget - and one option is to charge bereaved families the tax on top of inheritance tax. We explain how it could work
By Ruth Emery Published