When you exchange pay in return for a benefit that is exempt from National Insurance (NI) contributions you do not pay NI on the exchanged portion, only the actual earnings. As your entitlement to some benefits is based on the amount of NI contributions that you pay and others are based on the amount you earn, joining this scheme may affect your current or future entitlement to benefits including:
Incapacity Benefit
State Pension
Statutory Maternity Pay
Shared Paternity Pay
Statutory Sick Pay
Working Tax Credit
Child Tax Credit
Universal Credit
For more information about how these benefits would be affected by a salary exchange arrangement, contact the relevant benefit provider.