Employee benefits: a win-win for all
If you provide your employees with a range of social benefits focused on childcare, eldercare and health care, then you should expect some improvements in productivity in return.
You might decide to make use of the expertise of a specialist benefits provider; doing so should lighten your administrative burden and give your employees access to a wider choice of benefits.
You can, of course, help employees with both childcare and eldercare by offering flexible working and working from home, and neither will result in any tax cost. You could even pay a tax-free amount of up to £4 a week towards the additional costs that an employee incurs as a result of working at home.
Employers normally provide employees with financial assistance with childcare through the use of tax-free childcare vouchers, with each parent able to receive up to £2,916 annually. Childcare vouchers are usually offered under a salary sacrifice arrangement, but that’s not essential. With salary sacrifice, an employee gives up a portion of taxable salary in return for tax-free vouchers, saving both tax and NICs.
The childcare voucher scheme will no longer be available to new entrants from early 2017, so now could be a good time to be bringing people on board. You can also provide employees with tax-free nursery or child-minding facilities, but any other childcare support will be taxed. Unfortunately, the same applies to any eldercare support given to employees caring for parents. Employees can make use of a company gym without any tax implications whether it’s provided free or at a subsidised price. You can also provide healthy food in a company canteen. However, if you pay for a fitness club membership or provide a dining card, there are likely to be tax implications. Cycling to work can be encouraged by providing employees with tax-free bicycles and safety equipment, and an employee can be given the opportunity to purchase the bicycle at a fair market value following the end of the loan period.
You can provide tax-free annual health checks, health counselling and eye tests (where an employee is required to use a computer), but medical insurance and medical treatment are normally taxable. There is, however, an annual exemption of up to £500 if you pay for medical treatment to help an employee return to work following sickness or injury.
Be warned that tax-free benefits are generally subject to strict conditions and often have to be available to your entire workforce for the tax-free status to apply. Please get in touch if you want to discuss any aspect of your current benefits package, or to find out more about upcoming changes.