Take advantage of salary sacrifice and cut the cost of your tax bill.
The cost of living is increasing. Alongside soaring energy, food and fuel costs - National Insurance Contributions (NICs) are on the rise. The silver lining? Take advantage of salary sacrifice schemes like Cyclescheme and you can cut the cost of your tax bill.
From April 2022, workers in England and Northern will pay 1.25% more in National Insurance taking contributions from 12 to 13.25%. Unexpectedly, the price hike will be offset for some. As part of the recent Spring Statement, Rishi Sunak announced a payment threshold increase taking affect in July 2022. This see’s the amount an employee can earn before paying NICs rise from £9,568 to £12,570.
So, what does this mean?
In short – it all depends on your pay and personal tax allowance. As a rule of thumb, those earning up to £30,000 will pay less NICs overall in the 2022/23 tax year, whilst those earning over £50,000 will pay more.
Regardless of how you fare, most UK workers can cut their tax bill by taking advantage of salary sacrifice schemes.
What is salary sacrifice?
Salary sacrifice is a way of spending your pre-tax cash on things that directly benefit you. You can use salary sacrifice to contribute towards your pension, pay for new tech or, our personal favourite – get a new bike and accessories.
How exactly does salary sacrifice help me save money?
With salary sacrifice, you agree to give up a portion of your pay in exchange for a benefit (like a new bike). This means your annual salary is technically reduced (by the amount sacrificed) and you pay less National Insurance and Income Tax as a positive consequence.
There are a few important points to note:
- A salary sacrifice agreement must be arranged through your employer.
- Not all salary sacrifice schemes attract both National Insurance and Income Tax reductions.
- The amount sacrificed cannot take your salary below the National Minimum and Living Wage thresholds.
Save even more with Cyclescheme
A tax hike is never popular but the National Insurance increase does have a silver lining. You can now save an additional 1.25% on the bike of your choice with Cyclescheme bringing your total saving to 26-40%.
Whilst it might not sound significant – the extra saving soon adds up. On a £1,500 Cyclescheme package, you could save an extra £18.75 when choosing our recommended ownership option. That’s money that is better off in your pocket.
Plus, you still benefit from the usual Cyclescheme affordability perks. You get a new bike and/or accessories to use when cycling to work with…
- Nothing to pay upfront
- No credit checks
- No interest fees