An increasing number of independent schools are setting up salary sacrifice schemes for the payment of school fees. These are a tax efficient way of allowing staff to pay for their children's education at the school, thereby providing them with a valuable benefit. We have been helping schools to set up salary sacrifice schemes for this purpose since 2009.
A salary sacrifice scheme is a contractual arrangement under which an employee accepts reduced gross pay in return for their employer providing a specific non-cash benefit. It operates by reducing the employee’s gross pay by the value of the particular benefit. Employees gain because accepting a lower gross salary reduces the overall cost of the benefit as income tax and National Insurance Contributions (NICs) are deducted from it. The advantage to the employer is that, for every member of staff who takes part in a salary sacrifice scheme, its NICs will decrease.
Salary sacrifice schemes for school fees are accepted by HMRC as legitimate tax planning and are relatively simple to administer once established. A salary sacrifice scheme for the payment of school fees therefore provides an opportunity to reduce costs, offer a highly attractive retention incentive to existing staff and a means of being competitive in the recruitment market. Many independent schools have therefore chosen to take advantage of them in recent years.
We are able to advise on the implementation of a salary sacrifice scheme for the payment of school fees for a fixed fee and have developed a set of template documentation for this purpose including:
Salary sacrifice for the payment of school fees is a new approach which can provide real and positive benefits for your school and staff.
We will be delighted to help you introduce a scheme this academic year.
VWV's education practice enjoys a stellar reputation in the market as a one-stop shop.