UK businesses are facing growing pressures as we approach the new tax year, with many employers preparing to delay pay rises, promotions and new staff hires to offset costs. To ensure firms don’t face these challenges and the consequences that may follow, Jarvis, a pension fintech, has launched a free salary sacrifice calculator.
Jarvis’ salary sacrifice calculator allows businesses to see how much they can save while boosting pension contributions for their workforce in the upcoming financial year. For example, the tool found that for one SME, with 55 employees that have an average salary of £37,430, where employers contribute 3.5 per cent to pensions and employees eight per cent, the firm can save up to £15,150 in National Insurance contributions (NICs) annually through salary sacrifice, which in turn can improve talent retention and wider economic growth.
Despite the fact that businesses and workers have steadily increased their pension contributions over the last two decades, the average person isn’t putting away enough money for retirement. People often fall £115,000 short of the amount for a standard pension pot. Jarvis’ calculator will help businesses and employees identify how salary sacrifice can bridge pension shortfalls while alleviating tax burdens.
Through salary sacrifice, employees can agree to redirect part of their gross salary into a ‘non-cash’ benefit, such as extra employer contributions to their pension pot. As the redirected money reduces gross pay, it lowers the amount employees and employers owe HMRC, which creates savings for both.
This launch comes at a time of continued growth for Jarvis. It follows a £1.8million seed funding round last year, co-led by Ascension VC and Cornerstone VC and a recent partnership with payroll platform Finity, a back-office software platform for recruitment agencies and umbrella companies.
Royden Greaves, CEO and founder of Jarvis, said: “‘Salary sacrifice’ might sound daunting or elicit an immediate negative reaction, but it’s a much more straightforward and beneficial strategy for businesses and employees. We want to help SMEs navigate rising costs without compromising on hiring, promotions or pay rises.
“Our new calculator makes it easier for all parties to see where they can save and what they stand to earn by providing clear, actionable insights. Jarvis has always been about financial freedom; we believe people should have better control over their retirement planning, and it’s great that we can help small and medium-sized businesses along the way, too.”
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