# What is Salary Sacrifice?

Salary sacrifice is a contractual arrangement whereby an employee gives up the
right to receive part of their cash remuneration, usually in return for their
employer’s agreement to provide some form of non-cash benefit. This can lower
the amount of tax and National Insurance contributions (NICs) you deduct and pay
to HM Revenue & Customs (HMRC) on the employee's remuneration package because
the figure on your payroll is the one which is taxable.



For example, an employee's current contract provides for cash remuneration of
£40,000 a year with no benefits. The employee agrees with the employer that for
the future the employee will be paid a cash remuneration of £34800 a year and 52
childcare vouchers a year, each with a face value of £100. This would be
referred to as a salary sacrifice. An employee may also sacrifice a one-off item
such as a bonus.



Road Map – To Set it up Salary Sacrifice
Payrun -> Process Pay -> Weekly / Monthly / 2 Weekly / 4 Weekly / Quarterly /
Annual / Bi-annual -> Enter Deductions and Pension 'Enter link' -> Scroll to D6
-> Select Sacrifice item -> Add amount -> Save
( 'Payrun' is the button positioned in the tasking zone menu at the top. It is
the fourth button from the left)



For more information on salary sacrifice click on the link:-
https://www.gov.uk/salary-sacrifice-and-the-effects-on-paye
[https://www.gov.uk/salary-sacrifice-and-the-effects-on-paye]