Are Salary Sacrifice Schemes a Financial Wise For An Employee’s Family?

Salary sacrifice is a popular way for employees to save money on taxes and increase their net income – but what about the financial health of an employee’s family? Are salary sacrifice schemes really a wise financial decision for them?

What Is A Salary Sacrifice Scheme?

A salary sacrifice scheme is an agreement between an employer and an employee to reduce the gross salary of the employee in exchange for a non-cash benefit. This can include additional contributions towards pension plans or health insurance plans, childcare, among other benefits.

Benefits For The Employee

Let’s examine the numerous benefits of a salary sacrifice scheme for the employee:

1. Reduced Tax:

Depending on the type of benefit, a salary sacrifice scheme can reduce the employee’s tax burden substantially by allowing them to make additional contributions above the standard allowance. This can result in a lower taxable income for the employee and potentially reduced taxes.

2. Increased Net Income:

As a result of reduced taxes, an employee’s net income may increase. This can be of great benefit to those who live paycheck-to-paycheck and may allow them to save more money for their family’s future.

3. Long-Term Benefits:

Often, salary sacrifice schemes are made available with long-term financial benefits in mind, such as additional contributions towards a pension plan that can help secure the employee’s retirement.

4. Additional Perks:

Employers may also offer bonus perks, such as additional vacation days or a gym membership, that are available through salary sacrifice schemes.

5. Improved Relationship with Employer:

an employer is willing to invest in the employee’s future and establish a stronger relationship. This can lead to a more engaged and loyal workforce in the years to come.

Benefits For The Family

But how can a salary sacrifice scheme benefit an employee’s family? Here are some potential benefits:

1. Increased Savings:

By reducing taxes and increasing net income, a salary sacrifice scheme may enable the employee to save more money each month for their family’s future. This can help to create a secure financial future for the entire family.

2. Reduced Costs:

Many salary sacrifice schemes are designed to provide additional benefits, such as health insurance plans or pension contributions that can reduce long-term costs for an employee’s family. This can be of great benefit in helping families save money on medical bills or retirement expenses in the future.

3. Financial Security:

By making additional contributions each month, an employee can help to ensure their family’s long-term financial security. This can help to provide peace of mind for both the employee and their family as they plan for the future.


4. Improved Quality of Life:

By increasing the family’s savings and reducing long-term costs, a salary sacrifice scheme can help to improve an employee’s family’s quality of life. This can include more money for leisure activities or extra spending money for their children.

5. Improved Job Security:

By providing additional benefits, an employee can help to secure their job and be better prepared for potential changes in the future. This can make them more attractive to employers and ensure they have long-term job security.

Benefits For The Employer

The benefits don’t stop there. The employer can also benefit from a salary sacrifice scheme in many different ways. Here are a few of them:

1. Reduced Tax Liabilities:

Salary sacrifice schemes can help to reduce the employer’s tax liability, as they are no longer required to pay taxes on the additional contributions made by the employee.

2. Increased Employee Retention:

By offering salary sacrifice schemes, employers may be able to attract and retain talented employees who are looking for additional benefits.

3. Improved Employee Morale:

In addition to the financial benefits, salary sacrifice schemes can help to improve employee morale by providing additional benefits that may not be available elsewhere. This can help to foster a more positive work environment and lead to improved productivity levels.

4. Reduced Costs:

As salary sacrifice schemes can reduce the employer’s tax liability, they may be able to save money in other areas such as employee benefits or administrative costs.

5. Employee Loyalty:

By offering salary sacrifice schemes, employers may be able to create an environment of loyalty and trust between employer and employee. This can lead to improved retention rates and a more positive work culture overall.


A salary sacrifice scheme can provide a number of benefits to both the employee and employer. By reducing taxes, increasing net income, and providing long-term financial security for both parties, these schemes can be very advantageous for all involved. So if you’re looking to reduce costs or make additional contributions towards retirement plans, then salary sacrifice schemes may be worth considering.  And who knows, your family just may thank you for it too.

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