Without spending a great deal of money, these are a few ideas that can show you how to gain more value by putting forward a great employee reward system.
This is an idea that can be a very cost effective way to help your employees. Basically speaking, they will give up pay and instead they receive a benefit. These benefits may be more favorable in terms of tax treatment, or they could be totally exempt from both National Insurance (NI) and tax, just as long as certain criteria is met.
The salary scheme idea has been around for quite some time and usually cover:
– Training (including an MBA)
– Buying additional annual leave
– Workplace parking
– Childcare vouchers
– Pension payments
– Cycle to work
– Technology (including iPads)
Looking at the Reed case, as long as the arrangements are set up the right way, there is quite a bit of savings to be made on the employer’s NI contribution that will be do on any salary that is not sacrificed, which is currently the rate of 13.8%.
The share schemes for employees can be rewarding and offer long-term, efficient tax incentives. They can also be used to recruit, motivate and retain employees as well as help improve morale and staff performance.
There are a lot of schemes that will allow anything from a small group that contains key individuals to a full workforce that will be offered share options/incentives or direct shares in a tax efficient manner. These will include one of the more popular share schemes for employees, which is the Enterprise Management Incentive (EMI).
Targeted more for smaller trading companies, the EMI options are discretionary so that there is no need to offer it to all employees. There are certain statutory conditions that EMI Company and employees must meet. If the options do qualify as EMIs all throughout, and the options are granted with an exercise price that is equal to unrestricted market value at grant, there will be no NICs or income tax on the exercising of an EMI option. IAG in Australia offer a scheme like this, and it’s worth remembering prices rise and fall like all share prices.
However, the capital gains tax could be payable for the sales of optional shares.
Since April 6, 2014, the limit on an interest free beneficial loan went up to £10,000 without tax implications. These loans are usually used for commuter season tickets, but the loans can also be used for employee incentives.
Employers may want to reconsider current policies or offer additional assistance. By using the limit where the funds are used to help your employees whenever they need to raise money for a home deposit, getting a new car or cutting back on student loan debt.
Note: This is a guest post.