Susan Ball: Business advantages of tax-efficient benefits

The use of tax-efficient benefits to reward employees is an obvious avenue for employers.

Susan Ball, Crowe Clark Whitehill

Business advantages include employee retention, increased morale and wellbeing and increasing an employer’s reputation.

This is something that the government appears to recognise and encourage. Most recently, in January, a new tax exemption was introduced to enable employers to fund medical treatment, up to £500 for each employee and tax year, to help an employee return to work, provided certain conditions are met.

Building an effective HR strategy should be be the first step before trying to achieve tax and national insurance contribution (NIC) savings. That way, the employee would receive the benefits that he or she actually wants. Where the benefit is exempt from tax and/or NICs, there is a saving.

Additional holiday or a simple ‘thank you’ are items that may not attract specific tax breaks but also cost the employer little, if anything, to provide. It can also contribute to a reward package that would suit an individual.

But what are some of the tax- and NIC-efficient benefits that are available and how can they be delivered?

There are many specific tax and NIC exemptions for particular benefits; some have to be provided to all employees but others do not.

It is therefore important to individually check the particular rules for each item. The most common items are listed as: pension provision, childcare, loans, car parking at or near work, work-related training, employer-provided bikes, health checks, mileage allowances, share plans and green cars.

Many of these arrangements can be part of a salary sacrifice offering, and are popular in helping employers give employees additional tangible benefits at little or no extra cost.

Susan Ball is head of employers advisory services at Crowe Clark Whitehill.