For individuals in the highest tax brackets, why are the tax savings from salary sacrifice proportionally greater?
Answer
The income tax savings continue on the full sacrificed amount, unlike NI savings which are often threshold-capped
While National Insurance savings have usual contribution thresholds, the income tax savings apply to the entire sacrificed amount. Therefore, the higher the Income Tax rate bracket the employee sits in (e.g., 40% or 45%), the more beneficial the scheme becomes proportionally.
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