Cost of living crisis: the squeeze is on – here’s what you can do

theguardian.com:

The cost of living crisis is poised to deepen in April, when national insurance contributions will rise by 1.25 percentage points, just as inflation, energy and water bills soar. There may not be a way to reduce your outgoings but it is possible to boost what you have coming into your account or to make your earnings go further.

From 6 April 2022, the planned rise in national insurance contributions means a worker earning £30,000 a year will see their take-home pay fall by £17 a month, or £214 a year, while someone earning £50,000 will lose £38 a month, or £456 a year.

However, you may be able to avoid some of this increase in your bill by paying for some things before you are taxed. Your employer may allow you to donate to charity (for example, via the Charities Aid Foundation’s Give as You Earn programme), buy a bike or purchase an ultra-low emission car via a salary sacrifice scheme. These payments are taken off your gross income. The lower your gross income, the less you must pay in income tax and national insurance contributions.

“A lot of employees aren’t aware of the savings they can make by opting in to salary sacrifice,” says Dan Tomassen, a spokesperson for the accountancy firm HW Fisher.

This is particularly true of employees who have been auto-enrolled into a pension scheme, he says. “A lot of the time, the pension deductions that the employee has to contribute are taken from their net salary – so after tax has been deducted.” If your employer will allow you to make these contributions from your gross salary instead, via salary sacrifice, it will reduce the amount of national insurance you have to pay.

Employees used to be able to pay for childcare through salary sacrifice but that scheme has been replaced and is