Salary sacrifice arrangements for independent schools

"Independent schools should consider taking advantage of salary sacrifice arrangements to achieve significant cost reductions” says Chris Blundell, Principal.

There is currently an opportunity that could see schools saving money simply by making changes to employee contracts. By introducing a salary sacrifice relating to the fees teachers pay (over and above the marginal cost) in respect of their own children’s education costs if they are pupils of the school, schools will see a considerable fall in their National Insurance Contribution (NIC) payments.

“This is a relatively simple process to administer and, when correctly structured, is accepted by HM Revenue & Customs as a legitimate form of tax planning” explains Chris. “The benefits are clear for both employees (as they pay less income tax and NIC) and the school (as its NIC liability will decrease)”.

For further information and advice on how to set up a salary sacrifice agreement, contact Chris Blundell or Alastair Kendrick in the Employment Tax Services team.