Five hidden perks in your pay packet

Published by Nathalie Bonney on 04 March 2011.
Last updated on 21 August 2015

Pound coins

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.

1. Salary sacrifice

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.

2. Wellbeing

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.

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3. Company cars

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 ( and - 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.

Cut driving costs by getting a company car

4. Holiday buyback

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.

5. Discounts

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.

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