I'd like to make my salary more tax efficient but don't know how to approach my employer

Sometimes earning too much can be a problem... no, really. Just being into the cusp of higher rate tax triggers the need for tax assessment, checking what pittance of bank interest you have earned that year to add it to your tax return. It can also mean losing certain tax reliefs and benefits, Child Benefit for example.

Many organisations are now offering their employees salary sacrifice schemes. The idea behind this is quite simple. You give up part of your gross salary and, in return, your employer gives you a non-cash benefit that is ideally exempt from tax and National Insurance, potentially increasing the value of your overall pay package.

These non-cash benefits could include pension contributions, life cover, childcare vouchers as well as potentially, company cars, cycle-to-work schemes, parking at or near the workplace, and work-related training.

Here is an example of how using salary sacrifice can boost your retirement funding:

You earn £28,000 a year and decide you want to sacrifice £1,500 of your salary in return for your employer paying an extra £1,500 into your pension. Your net pay, after tax, National Insurance and your own pension contributions, falls from £20,452 to £19,492. But the value of your total net pay package including the employer pension contribution has increased from £20,452 to £20,992. This means you are better off by £540 a year.

Both you, as an employee and your employer can save considerable sums using salary sacrifice. Remember though, once you accept salary sacrifice, your pay in cash is lower, so you pay less tax and National Insurance. In addition, your employer will not have to pay their Employers' National Insurance contributions on the part you sacrifice. Some employers pass on some or all of these savings to you.

This all sounds good, but there are other considerations to make that may potentially have a negative impact. For example, because your salary is lower as a result of salary sacrifice, any life cover through a scheme at work will tend to be lower too.

Maternity pay and mortgage applications could also be adversely affected. A reduction in earnings could also reduce your State Pension as well as other State Benefits such as Jobseekers Allowance and Employment and Support Allowance. On the other hand, any claim for tax credits may increase.

As always, a vast subject, but one where the benefits of good advice could be vast and if you are still not confident about approaching your employer, after reading this article, let us contact them on your behalf.