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University funding cuts will lead to increase in salary sacrifice take-up, says CIPP

Employers could see a rise in salary sacrifice from September as employees seek ways to get round the rising tuition fees when funding for UK universities is axed later this year, according to the Chartered Institute of Payroll Professionals (CIPP).

With UK higher education institutions being principally funded by the Higher Education Funding Council for England (HEFCE), the end of funding signals a rise in tuition fees for students. Apart from assistance through student loans the CIPP believes the employee benefit of salary sacrifice could prove popular with many professionals looking to develop their knowledge.

Elaine Gibson, associate director of payroll qualifications at the CIPP, said: "Salary sacrifice is a contractual arrangement whereby employees can sacrifice a portion of salary in place of certain benefits. One of those benefits being workplace training and education, such a scheme enables both the employee and the employer to take advantage of tax breaks.

"For example the employer would not have to pay employers National Insurance on the value of the education or course provision and the employee would not attract deduction of tax and National Insurance. This is a win- win contractual arrangement for both the employer and the employee".

A four week survey carried out by the CIPP in December 2011 which looked into employee benefits suggested that the majority (70%) of UK employers already offer salary sacrifice as a benefit to employees on top of their basic salary. The survey also revealed that over a third (35.5%) of employers pay for employees qualification fees as a flexible benefit; the CIPP will be watching to see if this figure changes significantly over the next 12 months.

Employees are advised to explore options with their payroll and HR departments who will be able to advise about various employee benefits.