3. Salary Sacrifice

Question 1

Impacts of Salary Sacrifice

Answer 1

Impact on future pay rises
Impact on overtime, sick pay, holiday pay etc
Impact on Group DIS, critical illness
DB Schemes - pensionable salary
Contract, so not possible to revert to pre-sacrifice salary
Impact on PHI cover

Question 2

Conditions for Salary Sacrifice

Answer 2

Change to contract must be pre-sacrifice
Change must be permanent (entitlement to salary given up)
BE careful with director’s remuneration - check with accountant as to when it becomes assessible (e.g. date of end of period / date of assessment if later)
Bonus must be done before treated as received and must be contractual, not discretionary (though discretionary could be instructed to be paid as pension contribution)