Seven hidden perks in your pay packet
More than half of employees say their company has either frozen or cut pay over the past year, according to the Chartered Institute of Personnel and Development. But while there may be little chance of getting a pay rise this year, there are employee benefits that can boost your salary.
If you're not already paying into your company pension, do it now. Any money put towards your pension will receive tax-free treatment (contributions can't exceed your annual earnings or the annual allowance of £255,000).
That means that for every pound put in, you'd get £1.20 or £1.40 as a higher-rate taxpayer.
On top of your contributions, employers will also make monthly payments that either match yours or may even be more. In April 2011, new rules came in to give tax relief if your income was over £130,000.
This is where your employer reduces your salary in return for specific benefits, such as pension contributions, gym membership or private medical insurance. The advantage of moving this money over to cover these types of benefits is that you'll pay less tax on your salary.
Basic-rate taxpayers will benefit from having access to extras they otherwise couldn't afford, while higher-rate taxpayers can cut a chunk off their income tax bill.
For example, if someone earning £112,950 uses salary sacrifice to reduce their salary to £100,000, putting the additional £12,950 into their pension would reduce their tax bill by £7,750, according to Standard Life.
Larger companies will benefit from more attractive discounts with the big gyms like LA Fitness or Virgin Active because the gyms know they're onto a good corporate deal. Smaller-sized companies may have less negotiating power but you may still be able to get 10% off gym membership.
The benefits you'll get from company medical insurance schemes work in much the same way. Some offer free health checks, which are worth up to £500, so take advantage of these.
These tend to be the preserve of senior management and employees considered 'essential drivers'. However, salary sacrifice is an easy way for employers to open up the offer to all employees. Choosing a more fuel-efficient vehicle will also 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.
Also consider the cycle-to-work scheme (cyclescheme.co.uk and bikehub.co.uk) - this is a salary sacrifice scheme whereby your employer buys you a bike and you repay it out of your gross monthly salary, so you save on tax too.
Using a childcare voucher scheme will save higher-rate taxpayers up to £622, while basic-rate taxpayers save £933 - this amount 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).
Employers tend to allow employees to carry over a number of unused holiday days to the following year's annual leave.
However, if you're unable to take all of your holiday because of the demands of work and would therefore have to carry over a lot of extra days, it's worth seeing if your employer will buy these back.
Taking a more long-term view, ask your employer if you could start saving a small amount of your salary each month towards buying extra days that would eventually allow you to have a sabbatical of 10 to 12 weeks.
Depending on what your employer does, you may be able to take advantage of discounts like money off electronic goods or insurance products. It might allow you to either buy these on a discounted basis and/or through salary sacrifice, which means you won't be charged tax.
A tax-efficient way of receiving staff benefits, where an employee agrees to forego a proportion of their salary for an equivalent contribution into their pension scheme or in exchange for company car, gym membership, childcare vouchers or private medical insurance. A salary sacrifice scheme is a matter of employment law, not tax law, and is often entered by an employee who is about to move into the higher 40% tax bracket.
Private medical insurance
PMI allows you to skip the NHS waiting list and arrange treatment at a time you choose. With most PMI policies, you pay a monthly premium (the older you are, generally the higher premium) and the policy will then pay out, up to specified cover limits and after an agreed excess, for any treatment you might need. Not all conditions are covered by PMI and you get what you pay for: the more cover you want, the higher your premium will be.
A special government scheme operated through employers that allows you to pay for childcare from your PRE-tax salary. The vouchers cover childcare up to 1 September after your child’s 15th birthday (16th if they are disabled) and can be used at any registered and regulated nursery, playgroup and for nannies, childminders or au pairs.