Almost a third (30%) of DIY investors would opt in to use salary sacrifice, according to new research from Charles Stanley Direct. Rachel Reeves’ Autumn Budget mandated that employers are to increase their National Insurance Contributions (NIC) from 13.8% to 15% in April 2025. This prompted a stream of interest from employers into salary sacrifice schemes and how they may help reduce the impact of the tax change, and by extension, what this also means for employees and pension contributions.
Of the 30% of investors who would consider salary sacrifice, 20% say their employer already offers salary sacrifice, and although they don’t use it currently, they will. 10% say their employer currently does not offer salary sacrifice, but if they were to introduce it, they would use it.
A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit, such as company cars, pension contributions, or medical insurance. Rachel Reeves' Budget increased employers’ National Insurance contributions (NIC), which for many employers is set to make the cost of employment more expensive, potentially leading to pay freezes, hiring cuts, or job losses. With concerns over how this will have a knock-on impact on employees, there is much talk about whether salary sacrifice will help in boosting employees’ pension savings.
The survey revealed that 60% of DIY investors say their employer already offers salary sacrifice, while 15% say their employer does not. Of this, 29% say they currently use salary sacrifice schemes from their employer.
Looking at those who currently use or plan to use salary sacrifice (59%), half (51%) say they use it, or will use it, to boost their pension pot for retirement. A third (33%) say they use it or will use it to pay less national insurance. 29% say they use salary sacrifice to put them into a lower income tax bracket. A quarter (25%) say they currently or will use it because their employer encourages them to, while 21% use it to be able to afford a car or bike.
Lisa Caplan, Financial Planner at Charles Stanley, comments: “Following the Chancellor’s decision to raise employer contributions to National Insurance, the attraction of salary sacrifice has grown markedly. It gives employees the chance to bolster their pension savings while reducing tax liabilities, which employers also benefit from. With 15% of those surveyed saying their employers don’t offer salary sacrifice, there’s a chance that many businesses may be missing a trick.
“With DIY investors known for making their own financial decisions in their personal interests, it’s telling that so many use or plan to use salary sacrifice. While it may be a good option for many, it’s important to note that taking salary sacrifice is a decision to be made following close consideration of personal circumstances.”
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