Britons could pay less National Insurance via tax-efficient savings plan

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The amount one pays in National Insurance every paycheque is directly connected to how much they earn as it is calculated as a percentage. There is an easy way Britons could artificially reduce their take home pay, lowering their tax bill whilst not losing any money.

Salary sacrifice is a scheme whereby an employee and employer will agree to contribute a portion of one’s salary into their workplace pension. 

The employer will usually add in some contributions as well, making a particularly healthy pension pot if Britons use salary sacrifice consistently. 

Alongside helping employees to plan for later life, salary sacrifice takes off the pension contributions before tax is calculated. 

Usually the money used in this scheme is not eligible for income tax or liable to National Insurance contributions. 

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This will reduce the amount that employees pay on both tax bills. 

While this method will see Britons physically taking home less money, they will be paying less overall to HMRC and the difference in salary is not being lost but rather invested.

This could be vital for many as research by has shown that roughly 18.4 million Britons have no pension savings at the moment. 

The scheme also benefits employers as they will not be liable for the National insurance contributions on the sacrificed money either. 



Depending on one’s income, utilising salary sacrifice to the point that they slip back into the basic rate tax band could be incredibly beneficial. 

If one is paid relatively close to the £50,270, they could lower their salary into the basic rate and pay 13.25 percent but not the additional 3.25 percent higher rate. 

Similarly, Britons could use this method to lower their income tax bill as well. 

This could see the tax rate drop from 40 percent to 20 percent if they manage to slip into the basic rate taxpayer category.

Additionally, those with a salary above £100,000 could use salary sacrifice to get it below this threshold in order to keep their £12,570 personal allowance. 

The personal allowance is an amount which can be earned by Britons entirely free of income tax. 

However, once Britons reach the £100,000 threshold they get £1 less allowance for every £2 they earn above this. 

Essentially, by the time their salary reaches £125,000 they have lost their personal allowance entirely. 


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