Tax advice of the week: Sacrifice your salary

published 15 October 2010

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).

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Alternatively, why not just buy yourself an extra week's holiday from your employer? suggests Richard Mannion of Smith & Williamson.

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