How to maximise pay packet perks

Ben Birchall/PA

With income stretched to the limit and a pay rise nowhere in sight, making it through to payday each month can feel like treading water.

But have you considered if you are really making the most of your pay packet and taking full advantage of what is on offer? Here's our guide to the employee benefits that could make your salary stretch further.

When cash is tight you may feel like you cannot afford to pay into a pension, but joining your company pension really is a no-brainer. Contributions are tax-free, which means that that for every pound put in, you'll get £1.20, or £1.40 as a higher-rate taxpayer. On top of your contributions, your employers will also match your monthly payments or even pay in more.

Salary sacrifice
This is an arrangement where your employer reduces your salary in return for specific non-cash benefits, such as pension contributions, childcare vouchers, season ticket or even a bike or gym membership.

It might seem odd to request to be paid less - but the bonus is that you have access to non-cash benefits you might otherwise struggle to afford, while a lower salary means that you pay less income tax and National Insurance (NI).

For basic-rate taxpayers, it means paying 31% less tax and NI on the chunk of earnings you have sacrificed. For higher-rate taxpayers, this saving equates to 41%. Employers also save around 12.8% in employers' NI contributions that they do not pay on this part of your salary - a saving they may pay back to you as well.

Gym membership is costly so it is worth taking advantage of discounted deals. Large companies often have corporate deals with big gym companies such as LA Fitness or Virgin Active to offer employees heavily discounted memberships. Smaller companies tend to have smaller corporate discounts, but may still be able to offer 10-20%.

Companies of all sizes can offer their employees corporate medical insurance and the benefits will vary depending on the type of scheme they choose. It might also include cover for your family and free health checks which are definitely worth taking advantage of. If eyecare and dental plans are also on offer, ensure that you make the most of them too.

Childcare vouchers
If you have school-age children or younger and don't use childcare vouchers you could be missing out on thousands of pounds of tax savings - particularly if you pay the higher rate.

It usually works through salary sacrifice, which means that you purchase childcare vouchers from your employer through your pre-tax income and use them to pay for a registered playgroup, nursery, nanny, childminder or au pair.

Using a childcare voucher scheme will save higher-rate taxpayers up to £622, while basic-rate taxpayers save £933 - which can then be doubled if both parents take vouchers (families can therefore claim up to £486 per month in childcare vouchers free of tax and NI).

Company vehicle
Once the preserve of senior management and 'essential driver' employers, company cars are now more widely available thanks to salary sacrifice. Opting for a more fuel-efficient model will further reduce the tax you pay.

Agreements typically last three to four years, with the option of buying the vehicle at the end. Monthly deductions can be as little as £150, rising to £400 to 500 for a top-range vehicle.

If you want to be more active, consider the cycle-to-work scheme. Again this is a salary sacrifice scheme where your employer purchases a bike for you, which they can recover VAT on. You pay for the bike out of your pre-tax monthly salary, which reduces the amount of tax you pay.

Holiday buyback
Employers often allow employees to carry over a number of unused holiday days to the following year's annual leave. However, if the demands of work prevent you from taking all of holiday, leaving you a chunk to carry over – it is worth asking if your employer will buy these days back.

Alternatively, if you are considering a sabbatical in the future, ask your employer if you can start saving a small portion of your salary each month towards buying extra days that will eventually entitle you to take leave of 10 to 12 weeks.

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