Frequently Asked Questions
Holiday Staff Benefits
1. Am I eligible to take part in this scheme?
This scheme enables the Employer to provide this Benefit to eligible approved employees in return for a reduction in salary (salary sacrifice).
You are eligible to join this scheme if you meet all the following criteria:
- You are an employee of Mersey and West Lancashire Teaching Hospitals NHS Trust on a permanent or fixed-term contract (length dependant on product), i.e. the fixed term contract period must be the same term or exceed the period of the salary sacrifice term.
- You intend to remain with Mersey and West Lancashire Teaching Hospitals NHS Trust for the full length of the benefit period;
- Have sufficient salary remaining post-sacrifice to meet National Minimum Wage compliance. If participation in a scheme would cause pay to fall below NMW/NLW, the application will be rejected or capped.
- Not exceed the maximum thresholds set by the Trust deemed as reasonable amount of salary to be sacrificed by band/grade.
2. What is salary sacrifice?
Salary sacrifice is a scheme that allows employees to exchange part of their gross salary for non-cash benefits, for example a holiday, resulting in potential savings on Income Tax, National Insurance, and pension contributions. To participate, employees must sign an agreement that alters specific pay-related terms and conditions.
Your salary sacrifice deduction will be made direct from salary through Payroll, starting the month following the submission of your approved order.
The Holiday scheme is a non-cash benefit on which you make statutory savings. For this compliance reason, your Holiday Package can never be refunded for cash.
Taxation
Although salary sacrifice arrangements may reduce Income Tax, pension and National Insurance (NIC) charges, the provision of holidays are taxable benefits. From the 6th April 2017, HMRC announced that they would limit the tax advantages that employees could make through certain salary sacrifice arrangements. You will therefore be liable to a tax charge on the Benefit-in-Kind, or salary forgone, whichever is higher. The amount of tax liability will be shown in your quotation. Note: that following the HMRC changes, although tax savings may no longer be achieved, savings in pension and NIC will remain.
IMPORTANT Any future changes in tax, pension and NIC rules may result in a change in the savings you receive, either upwards or downwards. Such changes are outside of the control of the Benefit Provider and/or the Trust
3. What is ‘Benefit in Kind’?
A Benefit in Kind refers to non-cash benefits provided by an employer. These benefits are taxable.
When a benefit is taxed through payroll (called “payrolling”), the tax is taken from your pay within the financial year you purchase the benefit. If a benefit is payrolled, you will not receive a P11D form for that benefit. However, the Trust must still send HMRC a P11D(b) form each year for National Insurance and provide an annual statement of your benefits (P60) by 31 May.
Example 1:
Holiday Salary Sacrifice programme – booked a holiday for £1,200.00 at the end of December, with a 12-month contract.
Under HMRC rules, tax applies in the financial year you purchase the holiday. Your taxable pay will increase by £400.00 per month in January, February, and March, (£1,200 
3 = £400 based on the number of months remaining within the financial year) resulting in an estimated additional tax deduction for each of these months.
|
Month |
20% Tax Bracket, amount of additional tax to be deducted |
40% Tax Bracket, amount of additional tax to be deducted |
45% Tax Bracket, amount of additional tax to be deducted |
|
January |
£80.00 |
£160.00 |
£180.00 |
|
February |
£80.00 |
£160.00 |
£180.00 |
|
March |
£80.00 |
£160.00 |
£180.00 |
Your salary sacrifice deduction will be made from your pay for the length of your signed contract.
Tax liability cannot be applied simultaneously with the salary sacrifice deduction.
Please note these are illustrative only and specific advice should be taken on individual circumstances at the time the scheme is being considered by the employee and do not include the impact of a revision to personal tax allowances.
Example 2:
Holiday Salary Sacrifice programme – booked a holiday for £1,200.00 in early April with a 12-month contract.
Under HMRC rules, tax applies in the financial year you purchase the holiday. Your taxable pay will increase by £100.00 per month from April to March, (£1,200 12 = £100 based on the number of months remaining within the financial year) resulting in an estimated additional tax deduction for each of these months.
|
Month |
20% Tax Bracket, amount of additional tax to be deducted |
40% Tax Bracket, amount of additional tax to be deducted |
45% Tax Bracket, amount of additional tax to be deducted |
|
April |
£20.00 |
£40.00 |
£45.00 |
|
May |
£20.00 |
£40.00 |
£45.00 |
|
June |
£20.00 |
£40.00 |
£45.00 |
|
July |
£20.00 |
£40.00 |
£45.00 |
|
August |
£20.00 |
£40.00 |
£45.00 |
|
September |
£20.00 |
£40.00 |
£45.00 |
|
October |
£20.00 |
£40.00 |
£45.00 |
|
November |
£20.00 |
£40.00 |
£45.00 |
|
December |
£20.00 |
£40.00 |
£45.00 |
|
January |
£20.00 |
£40.00 |
£45.00 |
|
February |
£20.00 |
£40.00 |
£45.00 |
|
March |
£20.00 |
£40.00 |
£45.00 |
Your salary sacrifice deduction will be made from your pay for the length of your signed contract. Tax liability cannot be applied simultaneously with the salary sacrifice deduction.
Please note these are illustrative only and specific advice should be taken on individual circumstances at the time the scheme is being considered by the employee and do not include the impact of a revision to personal tax allowances.
4. How do the Salary Reductions and Benefit-in Kind tax work?
Your salary sacrifice will commence within a month of your approved booking confirmation and will be taken from your salary in equal amounts over 12 months. The tax payable on your Benefit-in-Kind will be collected in the tax year in which the product is provided to you and spread over the remaining months in that tax year (the tax year runs from April until the following March). Therefore, if your booking is confirmed in May, your Benefit-in-Kind tax will be spread over ten months (June-March) however if your order is approved in December, it will be spread over three months (January to March).
5. If my employment ceases on grounds of redundancy, how will my redundancy figures be calculated?
By entering a salary sacrifice scheme, you change your contract's basic pay terms and therefore redundancy payments, may be calculated using your pre-sacrifice salary.[DN2.1]
If you leave the Trust due to redundancy while participating in a salary sacrifice scheme, the arrangement will be treated in the same way as any other departure.
Any outstanding salary sacrifice amounts will be deducted from your final salary payment. If the amount owed exceeds your final salary, you will be invoiced for the remaining balance.
6. What happens if I am absent from work for a period of time?
Because salary sacrifice reduces your contractual gross salary, any pay-related benefits calculated on earnings—such as Statutory Maternity Pay (SMP), Statutory Sick Pay (SSP), Occupational Maternity Pay, or Occupational Sick Pay—may be impacted. These payments are typically based on your earnings during a defined reference period, and a reduced salary could result in lower entitlements.
If you are only receiving Statutory Maternity Pay (SMP), salary sacrifice deductions cannot be taken from SMP.
It is important to consider this when opting into a salary sacrifice arrangement, particularly if you anticipate taking leave due to illness, maternity, paternity, adoption, or shared parental responsibilities.
Key points to note:
- Statutory payments are calculated based on actual earnings during the relevant assessment period.
- Occupational pay schemes may also use your reduced salary as the basis for calculating entitlements.
|
Type of Absence |
Impact on Salary Sacrifice |
|
Unpaid Leave |
Deductions may be paused; scheme may be suspended or terminated. |
|
Sick Leave |
If pay drops below National Minimum Wage, salary sacrifice may be paused or stopped. |
|
Maternity/Paternity/Adoption Leave |
Usually paused during statutory pay periods; some benefits may continue. |
|
Annual Leave |
No impact unless combined with other types of absence. |
|
Career Breaks |
All salary sacrifice schemes will end and any remaining balances will be invoiced to you directly. |
- Salary sacrifice cannot reduce pay below the National Minimum Wage.
- During absence, payroll will assess whether deductions can continue.
7. How much will this Benefit cost me?
Your Gross Pay will be reduced by an amount, equivalent in total to the benefit value that you’ve chosen and spread evenly over the 12-month Benefit period.
8. How much will I actually save through the programme?
You will save on employee National Insurance (NI) and NHS pension scheme contributions (if you are a member). Payslips will show the Gross Salary reduction shown on your travel booking confirmation for your chosen holiday selection(s), but this figure is then subject to savings on NI and employee pension contributions.
The value of the Benefit in Kind will be applied to your pay and will be shown separately on your payslip.
9. What and how much can I select through the programme?
You can select from the vast selection of travel and/or accommodation packages available from Hays Travel Ltd. The total amount that you select as a non-cash benefit will reduce your salary, but your basic earnings (excluding unsocial hour's allowances) must not fall below the National Minimum/Living Wage.
10. Am I eligible to select this Benefit?
The salary sacrifice programme is open to eligible staff who meet all the criteria outlined in question 1.
11. Will this programme be offered again?
The programme will be reviewed on an on-going basis, but it cannot be guaranteed that it will be run again in the future.
12. Can I change my mind once I have signed the Benefit Agreement?
No. Once you have signed your Benefit Agreement you are not allowed to cancel and must comply with the Terms and conditions of the Tour Operator through which you have selected your Holiday.
Once a Holiday Package is booked by you, it cannot be cancelled or refunded for cash.
13. How am I made aware if my Employer has approved my travel selections?
Our Benefit Provider will contact you using the email address you have supplied. Please only supply an email address that you monitor and regularly use.
14. What insurances are included?
Travel Insurance can be arranged by Hays Travel and includes Covid-19 protection, ABTA and ATOL policies. Personal insurance can be purchased /arranged separately should you prefer.
15. When will I receive my chosen selection(s)?
Booking confirmation of your selected Holiday will be sent to you by email from Hays Travel Ltd upon agreement of your travel arrangements with our provider and Travel Advisors.
16. When will payroll deduction[NL3.1]s start?
Payroll deductions will commence within a month of your approved booking confirmation.
17. Where can I find the Travel Benefit Helpline numbers?
Please be advised that our travel provider [Hays Travel] will provide the travel benefits to you and not the Trust.
Their contact number is 0800 098 3589.
18. What do I do when all Travel details are delivered?
You are required to confirm receipt if necessary.
Please read the Travel/Accommodation arrangements and terms and conditions documents in full.
You are solely responsible for completing and returning any registrations required or bookings forms and doing anything else needed to arrange your travel documentation such as Passports or Visa’s.
If you are unsure about any travel arrangements or if you believe the Travel details are incorrect, then you will need to promptly contact our Benefit Operator, so that if applicable, arrangements can be made to correct this information. Should you fail to do this, and Travel/ Accommodation arrangements cannot later be altered, you and not us, will be liable for this and Salary Reductions will continue as per the period amount details shown on this signed document.
19. What if I leave my employment for any reason?
If you end your employment with your employer, the Benefit Agreement will terminate. We will ask you to pay the remaining amounts on the package(s) you have chosen. This will be deducted from your final net salary or if we are informed in advance can be spread over remaining month’s net salary. If we are unable to deduct the outstanding amount from your final salary an invoice will be sent to you for the full amount that is outstanding.
20. Does this Programme affect my NHS Pension?
Your NHS retirement benefits will be affected, as this programme reduces your pensionable pay which is used to calculate your NHS retirement benefits.
Is there any more guidance available?
You can find more Salary Sacrifice Guidance available on the Mersey and West Lancashire Page Intranet pages by searching ‘Salary Sacrifice’.
Please note-
The Trust Salary Sacrifice Programme is operated in accordance with the HMRC Optional Remuneration Arrangements.
It is an employee’s responsibility to check their payslip each month and inform Pay Services of any anomalies.
PLEASE ENSURE THAT YOU READ BOTH THE EMPLOYER/EMPLOYEE AND TOUR OPERATORS TERMS AND CONDITIONS