Figures recently released reveal that over 1.5 million households in the UK are in serious debt as the real value of pay falls. Research from the TUC and UNISON shows that over the last 9 years, UK wages have fallen by 10.4% and excluding mortgages, total unsecured debt for UK households has increased to £353 billion.
Few of us it seems have a surplus of cash left over each month to splurge on non-essential, expensive items, so for many, credit cards or overdrafts may seem like the only way to make a costly purchase. Worse still, for those with a poor credit history, pay day loans or even pawn shops offer what may seem like the only viable alternative to purchasing a much wanted item, leaving the loan provider rubbing their hands with glee at the enormous interest rate the new customer has just agreed to, and the consumer in yet even more heavy debt.
However, there is an alternative way to obtain certain items that is both cost-effective, saves you money in the long-term and prevents the buyer raking up even more debt. Salary sacrifice schemes - or as we prefer to term it, ‘salary maximise schemes’! - began with employees giving up part of their salary in return for a non-cash benefit, usually via their workplace, in return for childcare vouchers and pension contribution schemes. At the same time they enjoy relief on income tax and National Insurance contributions (NICs). Employers benefit from salary sacrifice schemes too - with every pound of salary replaced by pension contributions or childcare vouchers, they save NICs of 13.8%.
Now however, these schemes have moved beyond pensions and childcare to offer employees access to a range of other goods and services from cycle to work schemes to high-tech gadgets. The UK’s cycle to work scheme was launched in 2004 following the introduction of a tax break in the cycling industry, and to encourage more workers to commute to work on their bikes and leave their cars at home. Today, our own Cyclescheme is offered to employees in over 45,000 workplaces and has enabled over half a million people to cost-effectively purchase a bike on which to travel to their place of work.
More recently, we have also launched Techscheme and Phonescheme to give employees the ability to spread the cost on high-value tech devices such as tablets, laptops and smartphones and the latest fitness technology. These schemes also enable employees to obtain the latest ‘must-have’ tech devices at discounted rates.
Access to these items becomes affordable as all items can be paid for directly from your salary over 12, 24 or 36 months. All payments are interest free and there are no credit checks.
So for those looking to get their hands on the latest gadgets or invest in a bike to get to work, maximising your pay through a salary sacrifice scheme might be just the most affordable route to these items that you need, without the need to increase the consumer debt pile even further.
The introduction of the National Living Wage (NLW) earlier this year has certainly created debate, and there has been plenty of discussion around what it actually means for both businesses and their employees.
Cycle to Work Day 2016 is on Wednesday 14th September for a fantastic fourth year, encouraging everyone to take to two wheels and cycle to work for just one day.
It’s no secret that some employees struggle with the concept of sacrificing their salary in return for a product or service. Here, Julie Coxhill, client services manager at Grass Roots offers tips for launching and promoting a new scheme internally to help ensure a good take up.