The almost 10% increase in the main rate of the National Minimum Wage (NMW)  to £11.44 in April 2024 could hit employers that have allowed salary sacrifice schemes for employees earning a little over £10.42 an hour. If wages increase at the same rate as increases in NMW and/or there is sufficent headroom then there won't be a problem. But if employers have promoted schemes as a benefit where the after sacrifice gross pay is barely above the national minimum wage, then they will either have to increase wages in April or terminate salary sacrifice ensure that all staff meet NMW requirements.

The Chancellor has also reduced the rate of employee's National Insurance Contributions (Class 1 NIC) payable on earnings between £12,570  and £50,270 per year from 10% to 8% from 6th January 2024. This tax saving will benefit all employees earning over £12,570 pa but it does then reduce the tax saving from making a salary sacrifice that takes the post sacrifice earnings below £50,270. Gross salary sacrifice and the impact on net pay of anyone still earning above £50,270 will not be affected. Salary sacrifice has always worked best for those on the highest personal tax rates. The tax savings available for those on 20% Income tax and 12% NICs have now dropped from a total tax saving of 32% to 30%. This is not a big difference and the popularity of salary sacrifice for standard rate taxpayers will be more impacted by changes in electric car insurance rates and contract hire costs as these could be far more variable.