Will I pay tax or national insurance on my flexible benefits?
Answer
There are three different ways that benefits can be treated for tax and National Insurance purposes. The status depends on government guidance and initiatives.
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Salary Sacrifice Tax and NI savings – Government approved schemes which allow deductions from gross pay and savings on both tax and NI.
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Salary Sacrifice NI savings – benefit deductions are taken from gross pay. NI is saved, however, it is a taxable benefit so will be treated as a benefit in kind for tax purposes.
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No Tax or NI savings – Benefits which are treated as cash by the HMRC, such as retail vouchers. These offer discounts but not tax or NI savings.