Salary Sacrifice Tools & Resources
Available Salary Sacrifice Schemes
Cycle to Work Scheme
Save up to 42% on bikes and cycling equipment
Potential savings: Save roughly £250 to £420 on a £1,000 bike
Childcare Vouchers
Tax-free childcare support (closed to new applicants)
Potential savings: Exempt up to £2,860/yr (basic rate; closed to new entrants)
Electric Car Scheme
Low Benefit-in-Kind rates for electric vehicles
Potential savings: Significant tax savings
Pension Contributions
Additional voluntary contributions via salary sacrifice
Potential savings: Tax and NI relief
NHS Salary Sacrifice Overview
Salary sacrifice schemes allow NHS staff to exchange part of their gross salary for non-cash benefits, reducing tax and National Insurance liabilities:
How Salary Sacrifice Works:
•Reduce gross salary by benefit value
•Pay for benefit from pre-tax income
•Save Income Tax and National Insurance
•Employer also saves National Insurance
Available NHS Schemes:
•Cycle to Work Scheme (bikes and equipment)
•Electric/Ultra-Low Emission Vehicle Scheme
•Additional pension contributions
•Technology schemes (laptops, phones)
•Childcare vouchers (existing members only)
Key Benefits:
•Immediate tax and NI savings
•Spread costs over 12-24 months
•No credit checks required
•Convenient payroll deductions
Cycle to Work Scheme Details
The NHS Cycle to Work scheme offers significant savings on bicycles and cycling equipment:
Scheme Benefits:
•Save 25-42% on total cost
•Spread payments over 12-18 months
•No credit checks or interest charges
•Includes bikes, accessories, and safety equipment
How It Works:
•Choose bike/equipment up to scheme limit
•Employer purchases on your behalf
•Salary reduced by monthly payments
•Take ownership after hire period
Tax Savings Example:
•Bike cost: £1,000
•Basic rate taxpayer saves: £280
•Higher rate taxpayer saves: £420
•Effective cost: £720 or £580
Eligibility Requirements:
•Continuous NHS employment
•Minimum salary above Living Wage
•Must use bike for commuting
•Agreement to scheme terms
Electric Vehicle Scheme
NHS electric vehicle salary sacrifice offers substantial savings on low-emission cars:
Benefit-in-Kind Rates 2026/27:
•Electric vehicles (0g/km CO2): 4% (2026/27)
•Plug-in hybrids (1-50g/km): 2-14%
•Conventional cars: 20-37%
Scheme Advantages:
•Fixed monthly cost including insurance
•Maintenance and breakdown cover included
•No deposit or credit checks
•Newer, more efficient vehicles
Tax Calculation Example:
•Electric car P11D value: £30,000
•BIK rate: 4% = £1,200 annually
•Basic rate tax: £240 per year
•Higher rate tax: £480 per year
What's Included:
•Vehicle lease and insurance
•Maintenance and servicing
•Breakdown and recovery
•Annual MOT and road tax
Pension Salary Sacrifice
Additional pension contributions through salary sacrifice maximise retirement savings:
How Pension Sacrifice Works:
•Reduce gross salary by contribution amount
•Employer pays equivalent into pension
•Save tax and National Insurance
•Maintain same net contribution cost
Tax Relief Comparison:
•Normal contribution: Relief at marginal rate only
•Salary sacrifice: Tax + NI relief for employee
•Plus: Employer NI savings often shared
Contribution Limits:
•Annual Allowance: £60,000 (2026/27)
•Tapered for high earners (£260,000+ adjusted income, subject to threshold test)
•Carry forward from previous 3 years
•Lifetime Allowance protections available
Example Savings:
•Additional £2,000 pension contribution
•Basic rate: Save £560 (28% total relief)
•Higher rate: Save £840 (42% total relief)
•Actual cost: £1,440 or £1,160
Important Considerations
Key factors to consider before entering salary sacrifice arrangements:
Impact on Other Benefits:
•Student loan repayments may reduce
•Child Benefit threshold calculations
•Tax Credit and Universal Credit assessments
•Statutory payments (maternity, sick pay)
Pension Implications:
•NHS pension based on pensionable pay
•Salary sacrifice may reduce pensionable pay
•Consider impact on final salary calculations
•AVCs may be more appropriate in some cases
Exit Provisions:
•Usually cannot exit during agreement
•Exceptions for life events (marriage, birth)
•Employment changes may allow exit
•Consider commitment carefully
Financial Planning:
•Ensure adequate take-home pay
•Consider all tax implications
•Review annually for continued benefit
•Seek professional advice if needed
Choosing Between Salary Sacrifice Schemes
Start with your contract
Confirm whether the scheme changes pensionable pay, contractual salary, overtime rates, and statutory pay calculations.
Check the total cost
Compare headline tax savings with admin fees, insurance, maintenance, early termination charges, and the cost of buying privately.
Plan around life events
Maternity leave, LTFT changes, rotations, retirement, and moving trusts can all change whether a long commitment still works.
Model tax and pension together
The best scheme is not always the biggest tax saving. For NHS staff, pension accrual and annual allowance effects can be just as important.
Related guides
These related guides cover the next questions that usually come up after this topic.
Consider All Implications
Salary sacrifice affects your gross pay and may impact other benefits including student loan repayments, statutory payments, and benefit calculations. Review your individual circumstances and consider professional advice before proceeding.