How to align tax-efficient benefits with a CSR strategy

Forward-thinking and conscientious employers are aligning their benefits packages with their corporate social responsibility (CSR) strategy. This might involve partnerships with charities or introducing benefits that help reduce the organisation’s carbon footprint.

How to align tax-efficient benefits with a CSR strategy

If you read nothing else, read this…

  • Employers can align a range of benefits to their CSR strategy, including bikes-for-work schemes and payroll-giving plans.
  • Tax-efficient benefits are an obvious choice, because employers can donate the national insurance (NI) savings and employees can donate the NI and tax savings they make.

Tax-efficient benefits, such as payroll-giving or bikes-for-work schemes, are obvious vehicles to fulfil this aim. Employers can use their national insurance (NI) savings, while employees can use their NI and tax savings, for the greater good.

Virgin Media has taken advantage of the popularity of its bikes-for-work scheme to donate to its national charity, aligning the benefit with its CSR strategy.

The media organisation, which has included the bike scheme in its voluntary benefits since 2011, launched a programme in January 2014 that allows a percentage of its employees’ initial bikes-for-work order to be donated to buy cycling accessories and equipment for charity Scope.

Kirsty Hayward, reward director at Virgin Media, says: “We wanted our scheme to make a difference to more people than just our staff, so we worked with our charity team and [provider] Evans Cycles to make the donation to our national charity, Scope. 

“The funds were used to purchase a variety of cycling accessories and equipment, worth more than £3,000. The equipment has been delivered to Scope’s special-needs schools in South Wales, Cambridgeshire, West Sussex and Lancashire.”

Benefits to reduce carbon footprint

Since 1 October 2013, the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 have required, for the first time, that all UK-quoted organisations report their greenhouse gas emissions in their annual accounts, as well as what actions they plan to take to reduce their carbon footprint.

This could involve any benefits that reduce employees’ car journeys to work, including company car policies with an emissions cap of 130g/km, rail or bus season ticket discounts, and bikes-for-work schemes.

Paul Bartlett, head of employee solutions at Grass Roots Group, says: “Some employers will pay allowances to employees who use public transport or bikes for work as well, because it contributes to their carbon reduction targets, particularly where they include travel to work as one of their [CSR] factors.”

David Heaton, tax partner at Baker Tilly, adds: “Nowadays, when an employer bids for any contracts with large businesses or the public sector, part of the tender process involves outlining its CSR policy, so anything an organisation can add to that makes it easier for the tender to go through.

“We have some employers that are doing things that help them to be seen as green, such as bikes-for-work schemes. It is part of their CSR strategy.”

The Cycle to Work Alliance’s The green way to work – sustainable transport report, published in May 2013, found that users of bikes-for-work schemes are cycling a total of 13,222,620 miles a week and 67% of participants would commute by car if they did not cycle to work.

These commuters are saving 112,210 tonnes of CO2 in reduced carbon emissions. Bartlett adds: “There are other things that they do in terms of green initiatives, but bikes for work are clearly high up the agenda of things employers will normally highlight.”

Virgin Media’s bikes-for-work arrangement is part of a wider charity initiative at the media organisation. It has also raised more than £5,000 from the maturity of its sharesave scheme, which it donated to charities Foyer and Scope.  

Hayward adds: “The sharesave maturity donations can be made when members exercise their options, where they can donate the pennies and pounds that won’t buy a full share to charity. Once all the donations have been collected, we then make the donation to the nominated charity.” 

Many employers also use payroll-giving schemes as part of their organisation’s CSR strategy. Bartlett says: “The employee might choose to use a payroll-giving scheme and employers will match those amounts, and that will, in turn, be part of its CSR policy.”

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An employer’s CSR strategy can include a range of social and environmental promises from the business. But, when aligned with its benefits offering, particularly tax-efficient benefits, the strategy can really engage employees.

BOX: How salary sacrifice bike schemes work

  • Employees can reduce their tax and national insurance (NI) liability when they buy a bike through a salary sacrifice arrangement.
  • The typical saving for a standard-rate taxpayer is 32%, rising to 42% for higher-rate taxpayers.
  • Employers can save, on average, 13.8% of the total value of the salary that employees sacrifice because of the consequent reduction in their NI contributions.