Changes in tax legislation have made employers more wary about certain benefits, but any tax and NI savings are a strong draw in straitened times, says Tynan Barton
Some 85% of employers offer tax-efficient benefits through flex, a small drop from the 90% that did so in 2011. In 2008, this figure stood at 88%. Since then, there has been a rise in the percentage of employers offering bikes for work and pensions through flex, increasing from 66% and 65%, respectively, to 81%.
Childcare vouchers remain one of the most popular tax-efficient perks to be offered through flex. But changes to childcare voucher legislation last year mean that only basic-rate taxpayers receive tax and national insurance (NI) relief on up to £55 a week in vouchers. This is restricted to £28 a week for 40% taxpayers and £22 for 50% taxpayers. Meanwhile, changes that came into force on 1 January now see VAT imposed on benefits offered via salary sacrifice, including bikes for work, car parking, computers and gym membership.
Where employers have made savings by offering benefits with tax or NI breaks, more than half put these back into their flex scheme, and 34% share them with staff. Only 2% of respondents said they do not use the savings, a figure that has declined from 31% in 2008.
Offering tax-and NI-efficient benefits through flex is popular, but many employers (45%) are cautious about introducing new perks that may be affected by possible tax changes, and 10% would withdraw affected benefits from their flex scheme. However, this is a slight improvement on last year’s figures, suggesting growing confidence that the government will not make any major changes affecting these perks in the near future.
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