NHS salary sacrifice... is it worth it?

Greebo said:
It's pretty simple. There is a very short list of items which are NI and tax free under salary sacrifice.

Childcare vouchers
Additional employer pension contributions
Cycle to work schemes
Company cars
Work-related training
Car parking near your workplace

There is then a longer list which incur NI but are tax free.

Everything else like PS4 will be taxed and NI just like you had got paid the full amount of money on your wages and your employer will declare this on your P11D.

In general, salary sacrifice schemes are only beneficial for the employee for items which are at least tax exempt.

Everything else is just paying in instalments and sometimes if you are tied down to a supplier, it might not have been the cheapest place to purchase it from anyway.
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That makes more sense - apparently a gift voucher is considered readily convertible when I assumed not. As I said, not an expert!
 
Like I said, you can put anything through a salary sacrifice scheme. Whether there is anything to be saved depends.

Most things save zero tax or NI so what's the point?

There has always been the "fiddle" of top spec gaming pc's though. I think I once bought a watercooled pc from ocuk through salary sacriface :)

And i'm sure with some small companies and local businesses that there will be invoices supplied for items which qualify as tax free under the scheme when in reality they are something else but that goes on all the time even without the salary sacrifice scheme.

I know a business that got a local company to supply an invoice for a 110v power converter for the shop floor when in reality it was a 80" Samsung tv.
 
HOW THE SCHEME WORKSx

Welcome to the Home Electronics Scheme, which allows you to make significant savings by providing you with home electronic equipment through salary sacrifice. The scheme is open to all full term employees on PAYE payroll (except zero hours contract) where your salary does not go below National Minimum Wage after the reductions. Once you have chosen and ordered your equipment, you enter into an agreement with your employer for a period of 12 months. This consists of a salary sacrifice from your gross (before tax) salary for the value of the equipment you have selected. A salary sacrifice is where an employee gives up the right to receive part of their cash pay due under their contract of employment. In the case of the Home Electronics scheme you are agreeing to accept a lower amount of salary in return for your employer to provide home electronic equipment. The monthly Gross Salary reductions will be made direct from salary through Payroll, starting the month following submission of your order. Payslips will show the Gross Salary reduction for the equipment, but this figure is then subject to savings on National Insurance and NHS Pension Scheme contributions. The scheme is also tax efficient which means that you will save an element of Tax. Actual savings depend on your personal tax situation
 
From NHS website

What is a Salary Sacrifice?

A Salary Sacrifice is when an employee agrees to give up the right to part of their salary in exchange for goods or services, such as a car from NHS Fleet Solutions (www.nhsfleetsolutions.co.uk) or in this case Collection Cards in respect of NHS Home Electronic Solutions. The benefit of this is that it will effectively appear that you are paid a lower amount and so you will make savings on your national insurance, tax and pension payments – ultimately it is an opportunity for staff members to obtain electronic or white goods via an interest free loan, with no deposits or hidden payments.

Money is deducted from your salary on a monthly basis over a one or two year period depending on what you would prefer. To obtain no obligation quote and a breakdown of costs to how much this would be for you, please sign into our website.

Please note: The scheme will require a small monthly salary deduction payment to cover end of scheme liabilities and you will be liable to pay tax on any benefit in kind. All of these charges will be documented clearly when you are quoted and are explained fully in the brochure.

What is Residual Value Tax Fund?

Our scheme ensures each employee pays the full tax and VAT liability on each product. Throughout the contract period the employee makes monthly payments out of net salary to ensure that any tax liability at the end of the contract is paid (Residual Value Fund)

At the end of the contract the employer may offer to transfer ownership of the product to the employee at no cost. If the employee accepts this offer, they will incur a tax liability on the transfer. The cost of this tax liability will have been collected throughout the life of the contract and therefore the employee will have no additional charge.
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Notice the bit where they say you are liable for the benefit in kind tax. They still claim a saving on non tax free items mainly on the basis that you will be paying less deductions into your compulsory pension scheme. I would hardly call that a saving though and seems a bit wrong to include it in the savings figures??

In checking the maths it does seem that there can be some savings to be made in the difference between the NI and tax and the benefit in kind payments but seems to work out at around 8% max less the management fee that they charge.

As the NHS claim themselves though "ultimately it is an opportunity for staff members to obtain electronic or white goods via an interest free loan, with no deposits or hidden payments." not really for any massive savings.

Also not that its a "rental" scheme. AFter 12 months its not yours but can be but there will be another benefit in kind tax charge.
 
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JOSH86 said:
I get that for bigger items like a TV that would cost around £1000ish, something that I would class as a big purchase etc, but a console - it just doesn't seem worth the salary sacrifice for a £300 item.

I dunno, put in the same position tbh I probably would take up the offer if I really wanted a console.
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Still confused how it doesn't seem worth it?

Pay £28/month for a year (total £336) under Salary Sacrifice scheme, get PS4 now.

Save £28/month for a year (total £336), get PS4 in a year.

The only difference is getting the PS4 now instead of in a year.

Of course all of this assumes that the price IS the same.

Re: the actual OP

The only (legal) way I could see this working is that it is:

a) the supplier (in this case Curry's) has an agreement with the NHS that they will offer a discount to employees (e.g. based on the fact that it will generate bulk business)

coupled with:

b) the employer (NHS) offering their employees interest free loans to take advantage of the above discount
 
All the Op has to do is get the full quote from the NHS which will list the additional tax he will have to pay and add it to his 12 x £28 cost. If that's chepaer than buying one elsewhere then go for it.

I still dont think including pension contribution savings is the right way to look at it though.

Hell I can say I can go buy a pS4 for £226 today because I decided to pay £100 less into my pension this month.

Point is it still will have cost me £336.
 
drumlegend said:
Didn't ask for anyone to work it out.

Wanted peoples opinions on the scheme
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It's better than paying £380 to one of the catalogue shops

It's worse than paying ~£280 direct to Amazon/Currys/Etc.

It's worse than paying ~£280 direct to Amazon/Currys/Etc. on an 18.9% credit card (which would cost you £26/month)

Basically if you need a PS4 now, you don't have £280 and you can't get a half decent credit card or a buy now pay later deal from somewhere like Currys/PCW then it's an "ok" idea, but from a quick look at the maths you can get a far better deal otherwise.
 
Greebo said:
They still claim a saving on non tax free items mainly on the basis that you will be paying less deductions into your compulsory pension scheme.
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Wait - WTF? They're actually promoting not paying into your pension as one of the benefits????

surely you'd want such a scheme to allow you to increase your % pension contribution so you don't lose out
 
dowie said:
Wait - WTF? They're actually promoting not paying into your pension as one of the benefits????

surely you'd want such a scheme to allow you to increase your % pension contribution so you don't lose out
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Yep. One of the savings listed is the fact that since you will be having x amount deducted off your gross salary each month then you will be paying y less into your pension. Laughable isn't it?
 
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