Provision of flexible benefits
Some of the reasons for employers adopting flexible benefits are to make staff more aware of the value and cost of each benefit, and give more choice on the range of benefits provided. However, flexible benefits systems require tax compliance, management time and additional investment, so you have to make sure that the benefits of introducing flexible schemes outweigh the management time and set-up costs.
Under a salary sacrifice arrangement employees opt to exchange gross income for an employer provided benefit. Using this planning can avoid income tax and both employee’s and employer’s national insurance.
Some of the benefits that can provide tax and NI savings are:
- pension contributions
- death-in-service benefits
- HMRC-approved employee share schemes
- childcare vouchers
- bikes for work scheme
- health screening
- mobile phones
- holidays
- car schemes
- bus travel
- carbon offsetting
- staff discounts
- staff canteen
- training
If you are looking for some less costly ways to incentivise your staff at the moment, this may be an option.
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Cathy Corns is a Corporate Tax partner at Mercer & Hole.
