One in three (30%) DIY investors would opt in to use salary sacrifice to limit the impact of rising National Insurance Contributions, new research from Charles Stanley Direct shows.
Of this cohort, 20% say their employer already offers salary sacrifice and although they don’t currently use it, they plan to. A further 10% say their employer does not currently offer salary sacrifice but if they were to introduce it, they would use it.
It follows Chancellor Rachel Reeves’ announcement in the Autumn Budget that employers will have to increase their NIC from 13.8% to 15% in April 2025, prompting concerns over the impact this will have on businesses and their employees, potentially leading to pay freezes, hiring cuts or job losses.
Charles Stanley Direct’s survey revealed that 60% of DIY investors say their employer already offers salary sacrifice and 29% currently use the schemes available.
Among the 59% who currently use or plan to use salary sacrifice, just over half (51%) say they 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, while 29% use it to put them into a lower income tax bracket. A quarter (25%) say they use or will use it because their employer encourages them to.
Lisa Caplan, financial planner at Charles Stanley, said: “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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