The Ultimate Salary Sacrifice Toolkit: What Else Can Your Staff Save On?

You've sorted the bikes, but did you know your staff could be saving money on everything from electric cars to gym memberships through salary sacrifice? Whilst the bike-to-work scheme gets all the headlines, it's just the tip of the iceberg when it comes to what your team can sacrifice salary for.

The bottom line: Smart employers are using expanded salary sacrifice packages to attract talent, boost retention, and help staff stretch their pounds further in an increasingly expensive world.

What Is Salary Sacrifice Again?

Before we dive into the exciting stuff, here's a quick refresher. Salary sacrifice lets your staff exchange part of their gross salary for non-cash benefits before tax and National Insurance contributions are calculated. This means they pay less tax, you pay less National Insurance, and everyone's a winner.

The key is that a salary sacrifice arrangement must not reduce an employee's cash earnings below the National Minimum Wage rates, and employers must put procedures in place to cap salary sacrifice deductions and ensure NMW rates are maintained.

The Big Hitters: What's Really Worth Offering

Electric Cars: The Crown Jewel of Salary Sacrifice

This is where the real savings lie. Electric car salary sacrifice schemes can save employees 20-50% on vehicle costs, especially with the current 3% Benefit-in-Kind rate for electric vehicles and new government grants offering up to £3,750 off EVs under £37,000.

What's included: Insurance, maintenance, breakdown cover, road tax, and often home charging installation support.

Why it works: An employee earning £35,000 could drive a £25,000 electric car for around £300-400 per month through salary sacrifice, compared to £500+ through traditional finance.

Employer benefits: Companies offering electric car salary sacrifice can save £345 annually per employee earning £50,000, and across a workforce of 250 employees, this adds up to £86,250 in savings.

Technology & Home Essentials: The Everyday Game-Changer

57% of employees say that a home and tech salary sacrifice scheme is the most desirable workplace benefit. These schemes cover everything from laptops and smartphones to washing machines and sofas.

Popular items:

• Latest smartphones and tablets
• Home appliances (fridges, washing machines, dishwashers)
• Furniture from major retailers like IKEA
• Gaming consoles and entertainment tech

Real-world impact: When that washing machine breaks down, instead of scrambling for credit, your staff can get a replacement immediately and pay it off tax-efficiently over 12-36 months.

Enhanced Pension Contributions: The Future-Proofer

Pension salary sacrifice is a government-backed arrangement that allows both employers and employees to save on tax whilst boosting retirement savings.

How it works: Instead of employees contributing to their pension post-tax, they sacrifice salary pre-tax, and you contribute the full amount as an employer contribution.

Win-win scenario: Staff get more in their pension pot, you save on National Insurance, and you can choose to share those savings by increasing your contribution rate.

The Lifestyle Enhancers

Gym Memberships & Wellbeing

Fitness-focused salary sacrifice schemes can offer employees up to 25% off gym memberships at leading brands like Fitness First, PureGym, David Lloyd, and Virgin Active.

Beyond gyms: Some schemes include wellness apps, mental health support, and corporate health insurance packages.

Additional Annual Leave

One of the most requested benefits that few employers offer. Staff can purchase extra holiday days, typically 1-5 additional days per year, paid for through salary sacrifice.

The appeal: In a world where work-life balance is crucial, offering the option to buy extra time off can be a real differentiator in recruitment.

Childcare Support (Limited but Valuable)

While new applications for childcare voucher schemes closed in October 2018, existing participants can continue using the service for as long as their employer offers it. If you've got existing schemes, they're still valuable for eligible staff.

What About the Controversial Ones?

Non-Electric Cars

Since April 2017, most car salary sacrifice schemes lost their tax advantages unless they're electric or ultra-low emission vehicles. Traditional petrol and diesel cars are generally no longer worth offering through salary sacrifice.

Accommodation and School Fees

These were largely phased out in 2021 due to rule changes. Unless you had existing arrangements, these aren't viable options for new salary sacrifice schemes.

Setting Up Your Expanded Salary Sacrifice Menu

Start with Impact Assessment

Survey your workforce to understand what they'd value most. The decision on which scheme to select should be based on workforce demographics. Younger staff might prioritise tech and cars, whilst those with families might value additional leave or gym memberships.

Consider Your Admin Capacity

Electric car schemes require more setup but offer the biggest savings. Tech schemes are typically easier to implement but offer smaller individual savings. Choose what matches your HR capacity.

Partner with Specialists

You'll need to sign up with partners specialising in each salary sacrifice scheme of your choosing, as the lease or subscription company will handle implementation and paperwork with minimal effort on your side.

Build in NMW Protection

Every scheme needs robust monitoring to ensure no staff member drops below National Minimum Wage. This is especially important with multiple schemes running simultaneously.

The Financial Reality Check

For Staff

Higher earners benefit most from salary sacrifice due to higher tax rates. Basic rate taxpayers save around 32% (20% income tax + 12% National Insurance), whilst higher rate taxpayers can save up to 42%.

For Employers

Beyond National Insurance savings, salary sacrifice schemes can boost recruitment, reduce turnover, and support your environmental and wellbeing goals.

The Gotchas

• Reduced salaries might affect mortgage applications
• Some statutory benefits could be impacted
• Life insurance and loan applications may use reduced salary figures

Your Implementation Roadmap

1. Survey your workforce - understand what they actually want
2. Start with high-impact, low-admin schemes - electric cars and tech typically offer the best ROI
3. Build robust NMW monitoring - essential for compliance
4. Partner with established providers - don't try to reinvent the wheel
5. Communicate effectively - make sure staff understand the real savings
6. Monitor and adjust - track uptake and satisfaction regularly

The Bottom Line

Salary sacrifice isn't just about bikes anymore. Forward-thinking employers are offering comprehensive packages that can save employees thousands per year whilst reducing employer costs and boosting attraction and retention.

The key is starting smart: choose schemes that match your workforce demographics, ensure robust compliance monitoring, and communicate the genuine value to your team. In today's competitive talent market, a well-designed salary sacrifice package isn't just a nice-to-have – it's becoming essential kit for any employer serious about supporting their staff's financial wellbeing.