Salary Sacrifice: How businesses in Norfolk and Suffolk are saving money and supporting staff

With operating costs still on the rise and employee expectations shifting, more businesses across the region are turning to a lesser-known but highly effective tool, salary sacrifice.

It might sound like a financial catchphrase, but for many local employers, salary sacrifice is becoming a key part of their people strategy, saving money, boosting employee benefits, and improving retention at the same time.

What Is Salary Sacrifice?

Salary sacrifice is when an employee agrees to give up part of their gross (pre-tax) salary in exchange for a non-cash benefit like pension contributions, childcare vouchers, cycle to work schemes and electric vehicles.

As the sacrifice reduces gross salary, both the employee and employer pay less in National Insurance contributions (NICs) creating real savings on both sides.

Why it Works for Local Businesses

Here in the East of England, small and medium-sized businesses are looking for ways to:

• Attract and retain talent without raising headline pay
• Cut operational costs without cutting staff

Salary sacrifice ticks both boxes.

Take pensions, for example. By using salary sacrifice, an employer can save up to 15% on National Insurance contributions for every £1 sacrificed. That can be reinvested into the business or used to enhance the pension benefit for staff.

For employees, it can increase their take home pay and boost retirement savings.

A Norfolk Based Business Leads the Way

A professional services firm in Norfolk employing around 30 staff implemented a Salary Sacrifice scheme earlier this year for pension contributions.   The Employer NI Savings were over £7,000 annually and the Employee NI Savings were on average £220 per person per year, effectively increasing take-home pay or total pension value.

Benefits Beyond the Bottom Line

Salary sacrifice isn’t just about saving money, it helps build a better workplace. When this is done well, it:

• Supports employees with rising living costs
• Boosts pension engagement and long-term financial wellbeing
• Signals that you care about more about your team

It’s also relatively easy to implement, especially for businesses already using payroll software or a workplace pension scheme.

What Employers Need to Know

Before launching any salary sacrifice scheme, make sure to:

• Communicate clearly with staff.  It is voluntary and should be fully understood
• Ensure that staff understand the impact on statutory benefits, mortgage borrowing capacity, and any salary-based benefits
• Check employment contracts, some may require updates
• Work with a specialist to ensure the scheme is tax compliant and well structured

Turn Tax Savings into Staff Benefits

If you’re an employer in Norfolk or Suffolk looking to cut costs while supporting your team, salary sacrifice could be a win-win.

At Smith & Pinching, our Business Services team can help you:

• Design a tailored salary sacrifice scheme
• Understand tax savings and compliance
• Communicate the benefits clearly to your staff
• Integrate with your payroll and pensions setup

Call 01603 786820 or visit www.smith-pinching.co.uk/business to arrange a free consultation.