Could Smarter Employee Benefits Help Businesses Retain Their Best People?

With employers continuing to face rising costs, a Hampshire accountancy and business advice firm is urging businesses to consider tax-efficient rewards and benefits as a way of retaining valued employees.

HWB Chartered Accountants says organisations should look beyond simply increasing salaries and examine the wider range of incentives available.

The advice coincided with National Payroll Week, running from 7–11 September, and comes as employers prepare for the Chancellor’s Budget on 28 October and any further impact it may have on business costs.

Gary Brown, director at HWB (PICTURED) told That's Business that competitive salaries remain essential for recruitment and retention. However, businesses may be able to use their existing reward budgets more creatively to improve staff engagement and loyalty.

“For many businesses, the challenge is not simply attracting people but keeping the good people they already have,” he said.

“At a time when employers are facing significant cost pressures, increasing salaries across the board is not always the only, or most sustainable, answer.”

Options can include tax-advantaged employee share schemes, subject to eligibility requirements. These include Enterprise Management Incentives, Save As You Earn schemes, Company Share Option Plans and Share Incentive Plans.

Businesses may also use “trivial benefits” to provide small gestures of appreciation without creating an Income Tax or National Insurance liability, provided all relevant conditions are met.

Generally, a trivial benefit must cost no more than £50, cannot be cash or a cash voucher, must not form part of an employee’s contract and cannot be given as a reward for particular work or performance.

Long-service awards offer another opportunity to recognise loyalty. Qualifying non-cash awards may be exempt from tax where an employee has completed at least 20 years’ service and has not received a similar award during the previous ten years.

Other possibilities include employee suggestion schemes, recognition awards, staff social events, additional training, career development opportunities and flexible working arrangements.

However, businesses should avoid introducing benefits simply because they appear attractive. Employers need to understand what their employees genuinely value, what the business can afford and how each benefit will be treated for tax purposes. Professional advice may be appropriate before introducing a new scheme.

National Payroll Week is organised by the Chartered Institute of Payroll Professionals. It recognises the contribution made by payroll professionals who ensure millions of UK employees are paid correctly and on time.

HWB is based at Chandler’s Ford, near Southampton, and provides business and tax advice. Further information about its payroll services can be found at www.hwb-accountants.com.