Using the new Employment Allowance
If you are an employer, you're almost certainly in line to receive what is effectively a free gift from the Government worth up to £2,000, as part of an initiative to help smaller businesses.
Although there are exceptions, most employers qualify for the new Employment Allowance. This provides up to £2,000 a year off employers’ class 1 national insurance contributions – the 13.8% payroll charge on employee earnings over £153 a week.
While you could simply ‘bank’ the savings, you might also consider using the money to improve your business. The £2,000 allowance could provide the seed corn for employee benefits such as additional pension contributions, health insurance or life cover for employees.
Cash health plans can provide payments when your employees visit the dentist, the optician or the physiotherapist, as well as paying a daily sum when they are in hospital. Buying this cover as a group, even a small one, is generally more cost-effective than individual purchase.
These plans can help you as well as your employees. Knowing that you have funded or part-funded payments should help reduce absenteeism or sickness, according to cash plan provider Bupa. Some plans offer help with backache or stress, both common causes of absence.
If you are prepared to dig deeper, then consider group private medical insurance. Private hospitals can treat problems without long waiting lists – again improving staff morale and reducing time off. Life cover offers peace of mind to employees who may never choose it for themselves.
But bear in mind that choosing the right plan for your purpose, working out the cost and tax considerations can be a minefield; so you'll need some expert financial advice.
If your organisation is approaching your staging date for auto-enrolment or if you are in the throes of introducing this pensions innovation, there can be extra costs. You might well need the extra funds to help smooth the path. Auto-enrolment should not present too many difficulties with good preparation, but it does need to be taken seriously and you are likely to need specialist help.
Or if things are going well, you could spend the money on a staff party or outing, perhaps at Christmas or during summertime. Such events can help lift employee spirits – especially if your workforce is young - and provided the total of such events cost under £150 per employee in a tax year, there should be no tax or national insurance charges to pay.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.