COMPLIANCE
pension savings for the employer on the salary sacrificed.
Cycle to work salary sacrifice schemes This is a good way to promote health and well-being, as well as being ‘green’. The bike should be used ‘mainly’ for commuting and business. This has become increasingly difficult for those working from home or in a hybrid fashion. Childcare and workplace nurseries The cost of a workplace nursery is free from tax / NICs to employees, with no cap, unlike the previous childcare voucher scheme. It must: l have the appropriate registrations and approvals l be available to all employees l provide childcare for employees’ children, or children they have parental responsibility for l provide childcare up to the maximum age its registration and approval allows for. A salary sacrifice nursery scheme will attract tax, NICs and pensions savings for both employees and employers.
Financial assistance There’s a cost to providing financial assistance. However, some financial assistance costs can be mitigated, either by being a one-off cost or not creating the additional burden of employer pension contributions or NI contributions (NICs). Employers are able to provide interest-free loans to employees up to a total of £10,000 in any one tax year tax / NICs free. Some employers have provided a one- off payment to employees to help them with the cost-of-living crisis. Although this is seen as earnings and tax / NICs are deducted through payroll, it doesn’t add to the ongoing costs of the organisation and shows the business values its employees. There’s an exemption for trivial benefits which can be used to support employees. Trivial benefits can be given to employees free from tax / NICs where all the following conditions apply: l the cost of providing the benefit doesn’t exceed £50 l the benefit isn’t cash or a cash voucher l the employee isn’t entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements) l the benefit isn’t provided in recognition of particular services performed as part of their employment duties. There’s no limit to the amount of trivial benefits that can be given in a year but care should be taken to ensure HM Revenue and Customs (HMRC) wouldn’t see them as one larger / combined benefit on which tax / NICs would be due. There are different rules for directors of ‘close’ companies. Examples of trivial benefits could be: l a £50 food voucher l home stress kits l gifts for births l online yoga classes.
Corporate discounts There are many corporate discounts which can be provided to employees at little or no cost to the organisation. Organisations can negotiate local discounts with shops and businesses and provide local bus discounts on season tickets, for example. One of the most effective ways to provide discounts is via a rewards platform. The same platform can also provide an organisation’s employee assistance programme (EAP), but care should be taken that this is separate from the rewards area. EAPs can provide debt counselling to employees who are suffering anxiety and stress due to financial issues, which can be a great help in supporting financial well-being.
Salary sacrifice
Salary sacrifice schemes The benefits of electric cars, workplace nurseries and cycle to work are of value to many employees and can give savings on tax, NICs and pension contributions to both employers and employees. This is because they aren’t subject to the optional remuneration arrangements (OpRA) rules, whereas other types of salary sacrifice schemes are. Care also needs to be taken to ensure employees don’t fall below the NMW, with all salary sacrifices added together if the employee has more than one. Salary sacrifice electric cars Fully electric cars have a benefit in kind charge of 2% until 2024/25. There’s no fuel benefit charge as HMRC doesn’t view electricity as a fuel. There are tax / NI and pension savings for the employee on the salary sacrificed and NI and
Work-related training This benefits both employee and employer. The employee gets the
opportunity to progress and receive higher pay, paired with job satisfaction, and the employer gets an invested employee with more skills. There’s also the possibility of using the apprenticeship levy for payroll and accountancy qualifications, as well as many other areas. By looking at the organisation’s financial well-being offerings, an employer can provide employees with a culture of investment in both their emotional and financial well-being This will attract new talent, while also retaining current employees in these difficult times. n
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| Professional in Payroll, Pensions and Reward |
Issue 91 | June 2023
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