Salary Exchange

Also known as Salary Sacrifice, this is a way of enabling employees to pay for certain benefits by a direct deduction from their salaries. It is most tax effective with certain approved arrangements such as pensions. Indeed Salary Exchange can actually improve upon the already generous tax breaks available to those who contribute to pension arrangements by as much as a further 23% or more.

Care needs to be taken with Salary Exchange arrangements to ensure they are effective, from a contract law perspective, and not likely to fail any of the Inland Revenue tests. This is important as the Revenue will not grant pre-approval for such schemes and the cost and difficulties involved in unwinding an ineffective arrangement could be immense.

Lighthouse Group Employee Benefits can help you create, communicate, and administer a salary exchange scheme in the most effective way possible. Please talk to us about our on-line “Smart Exchange” facility.