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Tax-efficient ways you can reward your employees

Tax-efficient ways you can reward your employees

Stuart Miles@freedigitalphotos.net

Stuart Miles@freedigitalphotos.net

Rewarding your employees for loyalty or a job well done is a great way to boost morale and productivity. What if you could get the best of both worlds however and reward your employees in a way which benefits your company’s financials? Below we share some great ways you can do exactly this.

Pensions

An employer-provided pension is a huge perk and employees can even make their own contributions as and when they want. Providing a pension can significantly enhance an employer’s remuneration package and employees can convert their own contributions into employer contributions by use of a salary sacrifice. This saves on NIC and can also help to obtain higher-rate tax relief.

Childcare

Thanks to the ever-increasing cost of living, new parents are heading back to work much sooner than they used to. Childcare is one of the biggest issues that working parents face however so a company that offers this or contributes towards it, will be viewed favourably by employees.

A business can provide parents with vouchers to help fund approved childcare or can pay for the childcare directly up to a maximum cost of £55 per week. This is free of tax and National Insurance Contributions (NICs). Alternatively, employers can provide a free or subsidised nursery in their own or shared nursery as a tax and NIC free benefit without the £55 limit.

Loans

An employee may be trying to get a deposit together for a new house, need a new car, an annual season ticket for the train or are perhaps facing financial difficulties. Securing a loan these days is pretty difficult however and financial stress can have a huge impact on a person’s wellbeing and performance in the workplace.

Employer-provided interest-free or cheap loans that do not exceed £10,000 (to the individual employee) in total at any time during the year, are not liable to tax or NICs. A common way of doing this is for an employer to fund the purchase and then recover the loan monthly through a deduction from the employee’s salary.

Parking

If your office has limited or no parking, finding somewhere to leave the car can become an expensive nightmare for those who are in the office every day. An employer can however reimburse or purchase parking in advance for employees and this will be exempt of tax and NICs. Be careful however because the parking must be at or near the normal place of work and the relief does not extend to parking at train stations.

Health checks

Regular health checks not only offer peace of mind to the individual having them but companies can also ensure that employees are fit and healthy enough to carry out their work efficiently. If an employer provides its employees with one health screening and/or medical check-up per year, the cost of provision is exempt from tax and NICs as an employment-related benefit providing the screening is available to all employees or all employees who have been identified in a previous screening as needing a check-up.

Not all employees have to take up the option to undergo the screening but they must be presented with the opportunity to do so.

If you would like more information about tax-efficient ways of rewarding your employees, please feel free to contact Windsor Accountancy and we will be more than happy to help.