Debi O’Donovan: Tax breaks still drive benefits behaviour

If benefits did not offer employers better tax breaks than paying staff cash, then the employee benefits industry would be a lot smaller and most people reading this magazine would be doing different jobs.

Debi O'Donovan editor Employee Benefits 2013 (305 x 240)

Tax breaks drive behaviour in our world. Although there is plenty of information out there about these benefits, trying to draw them together takes some legwork (or fingerwork on online search engines). Hopefully, our special report on tax-efficient benefits will give you the pointers you need.

As we go to press, the Budget was announced by Chancellor George Osbourne. He outlined details on how tax and limits on taking pensions wealth as retirement will change to be far more flexible. This will lead to a radical change in pre- and at-retirement planning.

We are also waiting for details of a proposed £500 tax break on the cost of getting staff on sickness absence back to work quickly. This too could be a game-changer for workplace health.

The other area of benefits that has been heavily influenced by tax and national insurance (NI) breaks is flexible benefits. This month we publish our 18th annual flexible benefits research.

It is clear that the vast majority of employers that offer a formal flexible benefits plan now structure it through salary sacrifice. This is hardly surprising, given the fact that making the most of tax and NI breaks is the key reason for offering flex. Read the Employee Benefits/Towers Watson Flexible Benefits Research 2014 report with the how, what and why employers offer flex plans.

One of the most intriguing aspects of the research was finding out which flexible benefits are growing the fastest. Growing perks such as emergency eldercare are still offered by small numbers of employers, but indicate new trends in benefits provision.

We are seeing interesting new shoots of innovation elsewhere, too. Our annual Employee Benefits Awards judging took place in March (see full list of Employee Benefits Awards 2014 finalists) and, as always, we saw intriguing innovations all over the place.

We would like to extend huge congratulations to all the finalists. The standard was extremely high and many perfectly decent schemes did not make it through the rigorous process of looking for excellence.

Debi O’Donovan


Employee Benefits 

Twitter: @DebiODonovan