As this year draws to a close and 2023 is almost upon us, what can employers do to support employees in 2023 with the cost of living?
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With so many households struggling to manage their household budgets, the costs of Christmas and prospects of bills to pay in the New Year, 2023 will, for many, bring additional financial challenges and stress. Even where you can afford to offer salary increases or a Christmas or New Year bonus, this will not always benefit your employees.
For many working families, additional earnings or bonuses simply reduce the amount of Universal Credit they are entitled to – it’s trading Government £’s for Employer £’s, but the person you are trying to help, your employee, can sometimes end up being no better off, and sometimes, can end up worse off.
So how can you help?
How do you ease the cost-of-living crisis, and support your employees?
There’s no magic wand sadly, but there are some options you can consider to help make employees cash go further.
There’s a little known HMRC rule about triviality. Did you know you can give your employees a £50 gift voucher and the £50 won’t be subject to tax, NIC or P11D charges?
HMRC’s Trivial Benefit allowance means that businesses can save grossed up salary costs and employers NIC by simply delivering a gift, instead of making a payment through the employee’s salary. A personalised Gift Card can be an even better option, allowing your employee to decide how and where they want to use your gift.
The other advantage of a gift card is that its tangible, and you are delivering a strong message that you care. Using a Gift Card treats all employees the same. It values everyone’s contribution equally. You designate the spend, while Tax and National Insurance is avoided. It is a great way to say thank you without it being a huge payroll burden.
To deliver £50 cash in the employees’ hand via payroll, it would cost the business approximately £84.91 for a Scottish Basic rate taxpayer or £99.82 for a higher rate taxpayer when you factor in salary, income tax and the associated National Insurance. With the Gift Card option, the cost is as designated up to £50.
But what else can you do?
The cost-of-living crisis looks to be here for a while and solutions that put more money in your employees’ pockets will really help.
Operating your benefits in a smarter way, delivering you and your employees National Insurance savings is a great place to start.
Not all benefits can operate this way but your largest benefit cost – pension contributions – can operate on a smart basis, and it makes sense to explore this further. It will put money back in your employees’ pockets and create a budget for you to spend on tangible benefits for employees.
As always, Employee Benefits have to be relevant to have real value and have an impact on your employees’ lives. These benefits add value to your employees and ultimately your business.
What else can be done?
According to the latest data from the Office for National Statistics, UK households now spend an annual average of 16% of their budgets on food and non-alcoholic drinks. That’s a lot of money.
Imagine being able to reduce the price of the weekly food shop every week and other ad hoc purchases, think of the difference that would make. Offering an employer sponsored Retail Discount Platform was always a tangible employee benefit, but in this current climate it has taken on a greater importance.
Retail Discounts are relevant to all your employees. Everyone has regular outgoings on everyday products, making shopping discounts a fantastic benefit that delivers company-wide value.
Retail Discount Platforms can not only offer discounts on purchases, but cashback on purchases as well – helping your employees save money and engage with a low cost, employer sponsored benefit. It’s a win-win.
Having an employee benefit that can be integrated into your employees’ daily lives helps them save money week in, week out, and with the broad appeal comes high levels of employee engagement.
The cost-of-living crisis is bringing benefits into sharp focus, and we know that there is no one-size-fits-all solution for employee engagement. Smart payroll benefits improving take home pay, Gift Cards under triviality, and shopping discounts are relevant to everyone.
For more information contact Andy Eason at Acumen Employee Benefits, info@acumeneb.com, www.acumeneb.com, 01224 001946.