Limited Edition: Bonus Sacrifice
Recently, the online retailer ASOS accidentally printed 17,000 plastic bags with the word “onilne” printed, rather than “online”. ASOS immediately owned up to the error on social media but then joked that the packaging would now be a limited edition.
One area that is a “limited edition” in pensions is the world of bonus sacrifice. It is really important that you make the bonus sacrifice before the bonus is paid. So what would entice you to say to your employer “Please knock of £1,000 off my bonus, please”?
A bonus sacrifice is made in return for the employer’s agreement to provide the employee with some form of non-cash benefit, such as an extra employer pension contribution. The benefits are that there is immediate tax relief on the pension contribution. The employee and employer does not pay National insurance on the bonus sacrificed, making it a very effective way to save, especially where the employer shares some of its National Insurance saving.
If you are looking forward to a bonus is April, remember that bonus sacrifice is a “limited edition” and the request to the employer to pay “less” bonus to you must be done before the payment is made. You might also be interested in reading our content on salary sacrifice.
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