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)