UK workers could save more than £250 million a year in interest rate charges if companies introduced a payroll loan scheme like the Co-op.
By providing colleagues with the ability to repay loans direct from their salaries, the Co-op is able to offer a practical alternative to high cost forms of borrowing, which can adversely impact on the lives of individuals and their families.
Financial Wellbeing Company Neyber, which has been introduced alongside the Co-op’s two Credit Unions, offers loans that have a typical rate of 7.9% APR for which more than half of Co-op colleagues qualify. Because repayments are paid direct from salaries, the Co-op’s colleague loans provided by Neyber and by the Co-op Credit Union and the Value Credit Union, offer competitive rates of interest. Neyber provides education, saving and borrowing products which can be used to purchase big ticket goods such as cars or holidays, or consolidate outstanding debt, which is what the majority of Co-op colleagues have done when taking out a loan. As personal debt continues to rise it is estimated that around 300,000 people a month take out high-cost short-term credit. At the end of 2016, 1.6 million people had high cost credit debt, with the average loan just over £300. Around one in eight of the borrowers were in arrears, according to the Financial Conduct Authority. If that interest was only 7.9% APR instead of the current capped high cost credit loan rate of £24 per £100 borrowed for 30 days, then UK workers could save a total of £252 million per year. “We wanted to offer colleagues more practical alternatives to high cost borrowing as we are aware that some colleagues have personal debt issues that can lead to stress and impact on home and working life. Because the loans are paid directly from salaries they are almost certainly at a lower interest rate than colleagues would pay on loans from other lenders. That is why we have partnered with Neyber to provide more help for colleagues who want to consolidate their debts. Neyber will work alongside Value Credit Union and Co-operative Credit Union which have been offering savings and loan accounts to Co-op colleagues for 30 and 20 years respectively.” Helen Webb, Chief People Officer at the Co-op, said:
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You can read the full press release about payroll loans from the Co-op.
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Updates made to 480: Expenses and benefits – a tax guide 23 July 2018
An updated version of 480(2018) 480: Expenses and benefits – a tax guide has been published.
The sections detailed below have been updated:
Chapter 18 - Scholarships Section 18.3
The Chartered Institute of Payroll Professionals
Payroll: need to know
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