Just take a few moments to consider your work force…(No, I am not suggesting replacing Cheryl Cole…) Do you value your employees? Do you wish to retain staff? If so, have you considered a flexible benefits package? Such packages improve staff motivation just by the offering of them, and show that you are a caring employer.
The employee is offered the choice of receiving benefits. Obviously, the aim is to provide, as far as is possible, tax efficient benefits which reduce the employee’s liability. The package could be done under a salary sacrifice scheme whereby the employee forgoes a portion of his/her salary in order to obtain the benefits.
There are certain benefits which can be provided tax-free and therefore save your employees money, e.g. pension contributions, death in service life cover, extra holidays, cheap loans under a certain limit, etc.
Other benefits which may be taxable are still cheaper if provided by an employer because of discounts which are afforded to employers but not individuals, e.g. Private Medical Insurance, retail vouchers (major retailers offer a 5% discount).
One way of providing a benefits package is known as the cafeteria system. As the employer, you would have a fixed cost. The employee is allowed to choose from the “menu” those benefits for which he/she wishes to sacrifice part of his/her salary. The package can be reviewed/changed annually.
The perception and value of such packages is not to be taken lightly. Even if the employee decides the cash is still better, the fact that you, the employer, have given him/her the choice makes the employee feel valued and “worth it.”
Finally, since it is Christmas and the season of good cheer, have you considered what HMRC call trivial benefits such as seasonal gifts to employees, e.g. a turkey, box of chocolates, even a bottle of wine or two – but definitely not a case! (Ah well, Scrooge has to crop up somewhere at this time of year!)
If you require any further information please do not hesitate to give us a call. In the meantime, may we wish you a very merry Christmas and a prosperous New Year.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.