The hidden value of salary sacrifice: Unlock bigger savings beyond pensions
Salary sacrifice reduces National Insurance (NI) costs for both you and your employees. With changes to pension NI rules set for 2029, acting now gives you more years of savings and greater freedom to build engaging benefits that delivers value on multiple fronts.
Salary sacrifice beyond pensions
Pension salary sacrifice remains an important starting point, but notable potential savings sit in the non-pension benefits space. These areas were not touched by the Autumn 2025 Budget, giving you clarity and stability around future NI treatment.
Here are four routes you should consider:
1. Electric vehicles (EV)
Electric vehicle (EV) salary sacrifice schemes offer strong financial and environmental advantages, making electric vehicles more affordable through tax-efficient leasing. Because deductions are taken from gross pay, employees save on Income Tax and NI while reducing carbon emissions, and it positively impacts a business’s carbon position.
Employees exchange gross pay for an EV lease (generally without the need for a large deposit), reducing both Income Tax and NI. Typically, a solution will include comprehensive insurance, maintenance, breakdown cover, and road tax.
Other advantages include:
- Employers gain ongoing NI savings and visible progress against sustainability objectives.
- Quick to launch – can be implemented without a benefits platform.
- Very high demand and strong perceived value among employees.
The proposed electric vehicle excise duty (eVED) mileage charge, set at 3p per mile from 2028, is one change employers will need to factor into future planning. Current low benefitin-kind rates for electric vehicles remain in place until 2030, offering continued predictability for now.
There’s also some positive movement on grants and charging costs, which may help offset the impact of the upcoming tax changes. For a clear view of the wider implications, and how these shifts could affect your people and your costs, it’s worth speaking with an expert.
2. Cycle to work
If you want a simple, well-understood benefit that consistently engages employees, cycle to work remains a reliable option. It supports preventative wellbeing, fits naturally into ESG programmes and delivers predictable, repeatable NI savings.
What makes it effective:
- Easy take-up, especially at seasonal peaks
- Reduced NI costs for both you and your employees
- Alignment with physical health and environmental objectives
3. Holiday purchase
Offering the option to buy extra annual leave is a straightforward way to support work-life balance and increase flexibility without adding cost to your benefits budget.
Why it’s worth considering:
- Predictable annual enrolment windows
- Strong demand from employees seeking flexibility
- Employer and employee NI savings
4. Financial advice vouchers
If employee financial wellbeing is a strategic priority for your organisation, offering regulated financial advice through salary sacrifice allows you to support employees while keeping costs under control.
Key features:
- Up to £500 per employee per year can be provided tax and NI free-free
- Supports financial resilience and confidence
- Integrates well into broader wellbeing strategies
Pensions: why timing matters
The changes to pension NI treatment in 2029 mean that acting now gives you a valuable window in which to secure multiple years of uncapped NI savings.
From 2029:
- Employee contributions up to £2,000 per year remain fully NI efficient. Employee and employer NI savings are restricted to the first £2,000 of pension contributions made by salary sacrifice. For example, at £3,000 annual contributions:
- Employee NI increases modestly (roughly £80 for basic rate earners and £20 for higher rate).
- Employer NI savings reduce by around £150 per employee.
The core advantages of pension salary sacrifice remain intact, but the unrestricted NI savings available today will not last forever. Implementing now gives you more years of return and positions your workforce to benefit from the full tax advantages.
Understand cost exposure before changes arrive
With NI rules shifting from 2029, it’s important to understand how the changes could affect your organisation’s current and future savings. Modelling the impact now allows you to plan ahead, adjust your benefits strategy and identify where salary sacrifice can continue to deliver value.
Broadstone offers a free impact assessment that estimates the potential change to employer NI savings and highlights practical options for managing the transition.
Request your free impact assessment.
Why should you introduce salary sacrifice?
Introducing or broadening your salary sacrifice arrangement gives you more time to build participation and embed behaviours. Organisations that start now benefit most – not just financially, but in how their benefits strategy evolves.
Here are reasons why your organisation should consider salary sacrifice beyond pensions:
- More cumulative NI savings year on year
- Smoother operational rollouts, especially for EV and cycle to work
- More effective communication, planned at the right time rather than compressed or reactive
- Greater confidence in budgeting, as savings can be forecast and linked to your financial year
- Stronger integration with wellbeing, retention and ESG goals
Implementing salary sacrifice
Salary sacrifice is accessible and manageable, but it’s important to get the fundamentals right from the outset. This protects your employees, ensures compliance and avoids administrative issues later.
Key preparation steps include:
- Completing National Minimum Wage (NMW) checks
- Evaluating benefit-in-kind implications
- Managing contractual variations correctly
- Ensuring payroll accuracy and clear scheme windows
- Segmenting communications based on eligibility and needs
- Tracking savings, uptake and wellbeing outcomes
A well-structured approach helps you maximise participation and ensures employees understand the full value available to them.
Why expert support matters
Salary sacrifice can deliver meaningful savings, but the detail matters. Working with an employee benefits consultant helps you meet compliance requirements from the start, avoid payroll and operational errors, and ensure your scheme is set up correctly.
A consultant can also support your communication strategy, helping employees understand the benefits and improving participation. They can identify additional efficiencies or future opportunities you may not have considered.
In short, expert guidance gives you a smoother, lower‑risk implementation with stronger financial and wellbeing outcomes.
A cost-efficient change for business and employees
Salary sacrifice offers a rare combination of cost efficiency and employee value. The upcoming NI changes mean the next few years provide the strongest window to optimise your pension arrangements and explore wider salary sacrifice benefits.
Supplied by REBA Associate Member, Broadstone
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