What is salary sacrifice?

When an employee applies to join the Ride-to-Work scheme you will approve their application and then set-up the salary sacrifice deductions through your own payroll system. Typically the first deduction begins from the next payroll following approval to join the scheme.

For example, on a salary sacrifice of £600 over 12 months, the deductions will be £600 / 12 (months) = £50. This is the amount the employee will see on their payslip. This is the gross amount before tax savings, and the true cost to the employee each month would be £34 if they are a basic rate tax payer or £29 for a higher rate tax payer.

Salary sacrifice is the process which enables employees to benefit from the tax savings, and for employers to recover the initial cost of purchasing the cycling equipment.

The default salary sacrifice term is 12 months, but it can be from 6 months up to 72 months. Employers can set the salary sacrifice term from the control panel within the Ride-to-Work system.

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