With the cost of living still weighing heavily, HR and reward professionals face the challenge of extracting greater value from finite budgets. Salary sacrifice remains one of the most effective — and straightforward — tools to achieve this. It helps employees and employers reduce tax and National Insurance (NI) liabilities, while turning everyday benefits into a true win-win.
By exchanging part of their gross pay for non-cash benefits, employees reduce their taxable income and increase take-home value. At the same time, employers save on NI contributions, freeing up funds that can either support additional benefits or bolster the bottom line.
So how can organisations get the most from salary sacrifice arrangements? Here are five practical approaches to consider.
1) Focus on high-value benefits
The best place to start is with benefits employees genuinely appreciate. Some of the most effective salary sacrifice schemes include:
- Pension contributions: Among the most tax-efficient options. Both sides save on NI, and some employers enhance the benefit further by reinvesting their own NI savings into staff pensions.
- Cycle-to-Work: Still a proven favourite, with nearly two million employees taking advantage since launch. Employees typically save 25–42% on the cost of bikes and accessories, while employers strengthen their sustainability credentials.
- Electric vehicle (EV) leasing: One of the fastest-growing benefits, with EV salary sacrifice fleets rising 63% year-on-year (British Vehicle Rental and Leasing Association). With Benefit-in-Kind tax fixed at just 3% in 2025/26, employees can lease a brand-new EV far more cost-effectively than through personal leasing.
- Holiday trading: A popular choice for flexibility, allowing employees to buy extra leave. It boosts work-life balance while generating NI savings for both sides.
- Technology schemes: Employees can spread the cost of laptops, tablets, and phones through salary sacrifice, saving NI while making the latest tech more affordable -particularly appealing to younger staff.
Every workforce is different, so it pays to review demographic and lifestyle data to understand which schemes will land best.
2) Bring the savings to life
Employees don’t always recognise the full financial benefits upfront, which can limit uptake. Clear, personalised modelling makes a big difference.
For instance, a Tesla Model 3 that would usually cost £500 per month could fall to around £350 net for a basic-rate taxpayer via salary sacrifice (The Electric Car Scheme). Similarly, a £1,000 bike could cost between £580–£720 depending on the employee’s tax band.
Some employers integrate calculators into benefits platforms so staff can see instant, tailored savings. Others use real employee stories to make the advantages more tangible.
3) Connect with broader business goals
Salary sacrifice is most powerful when linked to the bigger picture. For example:
- Pensions strengthen long-term financial wellbeing.
- Cycle-to-Work promotes health, wellbeing, and environmental sustainability.
- EV leasing supports ESG and net-zero strategies.
- Holiday trading signals a culture of flexibility and balance.
By framing benefits within these wider objectives, employees see greater meaning in them, while leaders can make a stronger case for investment.
4) Simplify the administration
The biggest hurdle is often not demand, but complexity. Payroll, HR, and line managers all need to play their part to ensure schemes run smoothly.
Clear processes, regular training, and strong provider partnerships (especially for more complex offerings such as EV leasing) are key. The smoother the experience, the more likely employees are to trust and participate in the schemes.
5) Keep it under review
Salary sacrifice isn’t a “set and forget” benefit. Employee needs, tax rules, and market trends shift over time.
Review uptake at least annually, gather feedback, and adapt the offer. Younger employees may favour Cycle-to-Work or tech benefits, while later in their careers, pensions and EVs may resonate more. Keeping pace with changes to BIK or pension rules is also essential.
Regular reviews help ensure your portfolio stays relevant and impactful.
Making benefits budgets work harder
Salary sacrifice may not be the flashiest benefit, but few tools deliver as much impact. By cutting tax and NI, these schemes make everyday choices more affordable for employees while delivering savings that employers can reinvest.
For HR and reward leaders, the message is clear: revisiting your salary sacrifice offering is no longer optional. In today’s climate, it’s a strategic lever to increase engagement, resilience, and retention - and ensure your benefits budget goes further.
FlexGenius salary sacrifice schemes
At FlexGenius, we make it simple for organisations to unlock the full value of salary sacrifice. Our platform offers a wide range of flexible schemes - from pensions and Cycle-to-Work to electric vehicles and tech - all delivered with seamless integration and clear communication tools. By combining smart technology with expert support, we help HR and reward leaders cut through the complexity, boost employee engagement, and maximise savings for everyone.
Ready to see how salary sacrifice could work for your organisation? Book a demo, email enquiries@avantus.co.uk or call 0800 652 4745 and start making your benefits budget go further.
