Millions of workers missing out on pay rise worth £1,000s – the five checks you should do now
MILLIONS of workers are missing out on a pay rise worth £1,000s by not making the most of their salaries and staff perks.
Wages have stagnated in the UK since the 2008 financial crisis with pay lagging behind the cost of living.
But there are a host of ways to make the most of your earnings or any company benefits and make life financially easier.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “When you consider what you get out of work, some people might say positive things about enjoyment or a sense of achievement.
“Others might just focus on the salary.
“However, the rewards don’t stop there, because there are a number of other workplace perks you can make the most of, which could leave you hundreds or even thousands of pounds better off.”
Cycle-to-work schemes
Cycle-to-work schemes are a way of not only boosting your health, but saving money through tax-free contributions from your bosses.
They work by your employer buying a bike for you and then your hiring it through them through monthly salary sacrifice payments.
But the key thing is that it means you end up paying less National Insurance and income tax on your salary.
Sarah Coles said such a scheme could save you around £300 overall on a bike costing £1,000.
Opt for salary sacrifice
Salary sacrifice lets you give up a portion of your salary in exchange for a higher pension contribution from your employer.
Your overall salary may go down but your take home pay doesn’t as the process means you pay less National Insurance and income tax on your earnings.
Your employer has to fork out less on National Insurance too, and may pass on some or all of the savings to you.
Clare Moffat, pensions and tax expert from Royal London, gave an example of someone earning £35,000 and whose bosses share 50% of their National Insurance saving with their employees.
Without using salary sacrifice, the employee would see £2,450 go into their pension each year.
However, with salary sacrifice, they would see £3,129 go in each year instead – £679 more – with their take home pay remaining at £27,320.
It’s not an immediate boon, but one that pays dividends in retirement.
Make the most of auto-enrolment
Any worker over the age of 22 earning more than £10,000 is auto-enrolled into a workplace pension.
As well as your own contributions you get a contribution from your employer from the government in the form of tax relief.
However, most bosses only pay contributions at the auto-enrolment minimum level of 3%.
But, Helen Morrissey, head of pensions and retirement at Hargreaves Lansdown, said you can increase your pension contribution and ask your employer to match it, meaning you benefit from more tax relief.
This means you could see more added to your pension pot without having to contribute much more yourself.
Numbers crunched by Royal London suggest someone increasing their pension contributions this way by just 2% could add hundreds of thousands of pounds to their retirement pot in the future.
Income protection insurance
Income protection insurance offers you a regular income if you are unable to work due to illness or injury.
It is designed to cover a percentage of your earnings, and can cover as much as 90% although typically covers 50-60%.
You can decide to take out income protection yourself, but a lot of employers offer it as a work benefit.
If you’re not sure whether you have it included as part of your job, it’s worth checking your employment contract or speaking to the HR team.
Sarah said by the age of 50, you can end up paying as much as £50 a month for income protection, so if your employer offered it, that could save you £600 over just one year.
Make sure to compare cover before you take it out.
Childcare help
Some employers offer targeted help to staff with children.
For example, First Direct has two on site childcare facilities at offices in Staffordshire and South Lanarkshire, Scotland.
Meanwhile, fashion retailer Next has a purpose-built nursery at its head office in Leicester.
What help is available for parents?
CHILDCARE can be a costly business. Here is how you can get help.
- 30 hours free childcare – Parents of three and four-year-olds can apply for 30 hours free childcare a week.
To qualify you must usually work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year. - Tax credits – For children under 20, some families can get help with childcare costs.
- Childcare vouchers – If your employer offers childcare vouchers you can get up to £55 a week in tax and national insurance savings.
You pay for your childcare before your tax contributions are taken out.
This scheme is open to new joiners until October 4, 2018, when it is planned that tax-free childcare will replace the vouchers. - Tax-free childcare – Available to working families and the self-employed, for every £8 you put in the government will add an extra £2.
Insurer Zurich also offers miscarriage support, IVF support and bereavement and compassionate support.
You can read a more extensive list of companies offering perks for parents here.
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