With big changes happening in 2017 and beyond, is it still the best bet?
When changes to the way salary sacrifice works were announced in the 2016 Autumn Statement, there was the potential for some serious changes to the way we do things coming on the horizon! But it wasn't bad news for long...
When the changes were finally announced in November, there was a long-awaited clarification to the rules after a pretty long period of not knowing what was going to happen next – and a great deal of the most important benefits, like childcare vouchers and cycle to work, were going to continue to give savings to employers and employees alike as before.
And, of course, tax and NI savings on the majority of existing programmes were announced as being set to continue until April 2018, with a handful lasting to 2021. So, plenty of time to prepare.
The changes have also challenged benefits providers, such as ourselves, to think a bit more creatively about what we can provide when it comes to salary sacrifice – and the similar benefit option, net pay deduct. So, let's take a look at what's coming up – and what options are out there for employers looking to offer more for their staff.
future rule changes
If you want to find out what's already happened, take a look at our blog on the changes from earlier in the year – it'll tell you about everything that kicked in on 6 April 2017. And here's a quick overview of what's to come over the next few years:
Existing salary sacrifice programmes will lose tax and national insurance savings for the following benefits:
- Health screening
- Cars (not including ultra-low emission models)
- Phones and computers
And finally, existing salary sacrifice programmes will lose tax and national insurance savings for these last few benefits:
- Car parking
- School fees
However, childcare vouchers, ultra-low emission cars, cycle to work schemes and pensions will continue to save people money on tax and NI indefinitely.So that's good!
So, what now?
This was our statement when the changes were first announced in November 2016, and we still stand by it:
The industry now needs to develop innovative ways for employers to deliver attractive and innovative benefits to their workforce through an alternative mechanism. Even without tax efficiencies, many of the benefits in question can still be of great value to employees, and this should not be overlooked. Providers must work with businesses to establish a sustainable method of funding these important schemes, which improve the day to day lives of employees.
Even if they're not saving money on tax through salary sacrifice, the offerings to your employees through a net pay deduct scheme are still incredibly varied. It's all about building that culture that cares – a workplace where people get the help they need to afford the things that make life better.
Here are our three tips for key benefits to make available to employees through net pay deduct – even if they won't see tax and NI savings anymore, there's still plenty of good reasons for offering them.
Further education and training courses can cost a bundle, but people still really want it. In fact, a quarter of millennials are looking for training benefits from their employer – they're keen to advance their career, and will put in the hours to make sure they can.
Employers can pay for training up front, and then employees pay it off through small monthly contributions taken directly from their net pay. By making a little dent in their lower wage, they can set themselves comfortably on the path to a higher one.
New tech is always a popular option. Tablets, watches, phones, laptops, PCs, games consoles, Fitbits… the list of the next top gadget is ever-evolving!
But tech is expensive, and people will often take out credit agreements to pay for it. There might still be an upfront cost and, in the end, the interest makes it cost so much more – and that's if they get past the credit check.
A net pay deduct arrangement makes it all easier – no upfront costs, checks, or interest. Just affordable payments that help people afford the things they want. And, of course, there's plenty of benefits to better-connected, tech-savvy employees too!
Everyone knows that a healthy employee is a happier employee – and there are loads of health services you can offer to your people through net pay deduct. Don't worry, it's not like US-style health insurance – instead, you can provide a range of preventative services that help people get into better shape.
Health screenings and health plans can make a real difference in improving the way people take care of themselves, leading to fitter, happier lifestyles, and reduced absences too, if you're looking for a business case! These services are private, so might be out of reach to many without a little help.
What do you want to offer?
Or, what do your employees want to see? We've made a few suggestions of popular choices here but, in reality, there's no limit to what you could provide through net pay reduction.
It's all about making products and services more affordable for your people – so why not throw open the suggestion box and see what they'd like a little bit of help with? Whatever it is, the benefits for employee engagement will be the same: it's something they wanted, or needed, and you're the great employer who helped them get it.