January 23 2016.

With the introduction of the National Living Wage less than three months away, many employers need to take urgent action to ensure full compliance with this new law, research shows.

The new requirement sets a higher minimum income level for employees aged over 25. This is generally understood, yet the interaction with the use of Salary Sacrifice in employee benefits provision is less clear. This could result in employers inadvertently breaching the new minimum income level.

A survey by Jelf Employee Benefits finds that almost four in ten employers (39 per cent) are unaware of this issue, with a further 19 per cent aware of the possible implications of using Salary Sacrifice, but yet to review this to ensure compliance.

Only 9 per cent of respondents have reviewed and resolved any problems in this respect.

Salary Sacrifice is a widely employed and hugely tax-efficient mechanism of funding many employee benefit packages. The 'sacrificed' tranche of salary avoids both income tax and national insurance, and is typically used to fund a benefits premium or contribution.

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