On 23 November 2016, Chancellor Philip Hammond delivered his Autumn Statement 2016 speech.
Below is a round-up of the key announcements that impact employee benefits:
Tax-free personal allowance will increase to £11,500 in April 2017 and £12,500 by the end of the current Parliament’s term in 2020. The higher-rate threshold will increase to £45,000 in 2017 and to £50,000 by 2020. From 2020, the tax-free personal allowance will rise in line with the Consumer Price Index rather than the national minimum wage.
The national living wage will increase by 4.2%, rising from £7.20 an hour for those aged 25 or over to £7.50 an hour in April 2017.
From April 2017, the government will limit the range of benefits that attract tax and employer national insurance (NI) advantages when offered through a salary sacrifice arrangement. Benefits that are exempt from these changes include pensions and pension advice, childcare, bikes-for-work schemes and ultra-low emission vehicles (ULEVs). Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation, and school fees will be protected until 2021.
The government will consider how benefits in kind (BIK) are valued for tax purposes, with a call for evidence to be announced at the Budget 2017. The government will also consult on employer-provided living accommodation.
The government will set new bands and rates for company car tax for the lowest-emitting cars, which are set be announced in the Finance Bill in December 2016, ready to come into effect for 2020-21. Tax rates for cars emitting more than 90g of carbon dioxide per kilometre will rise by one percentage point.
From December 2016, the government will abolish the tax advantages awarded under employer shareholder status (ESS), with the status itself to be closed to new arrangements at the next legislative opportunity.
The standard rate of insurance premium tax (IPT) will increase from 10% to 12% from June 2017.
The government is to consult on options to tackle pension scams, including a ban on cold calling.
From April 2017, employer and employee national insurance (NI) thresholds will be aligned to pay NI on weekly earnings above £157.
The government will reduce the money purchase annual allowance from £10,000 to £4,000 from April 2017. A consultation on the change will run until 15 February 2017.
If Father Christmas was an employee
Pantomime season is upon us so a seasonal question for you: If you take on Father Christmas as an employee will he have to be auto enrolled and where would you send his regulatory notifications?
There are a number of reasons why he should be (workforce harmony, simpler to administer pensions on the same basis for all staff etc.) but there are also a number of other considerations you could take into account!
For example, where is he ordinarily resident? Let’s assume he is resident somewhere other than the UK, then will he spend enough time in the UK to qualify as resident?! If he does, lets also look at the latest Directives from Europe regarding paying overtime and holiday pay (and given he potentially has up to 51 weeks holiday a year how do you plan for that!
We recommend that you take him on a short term contract until Christmas Eve and then you can safely avoid the earnings spike at Christmas. This, combined with using Postponement from day 1 until 3 months should safely see this situation avoided.
Also, is it likely that he only has one job given the very seasonal nature of his work?!
And let’s not forget his age! Given he is likely to be older than State Pension Age this makes him a non-eligible jobholder. But when you look again surely he is older than 75 and so outside the scope of auto-enrolment altogether!
Other considerations I have had include his means of transport – does that count as a company vehicle, and also what about the Grotto – is that given as part of the job and if so does he pay tax on the Benefit In Kind?!
In summary though – I imagine the Pension Regulator guideline is 'don't assume that because someone is a fictional character they are not classified as a worker for AE purposes.'
Oh and in terms of the regulatory notifications, you can either provide these via a Benefits Portal like BORIS or post them to:
Santa/Father Christmas,
Santa's Grotto,
Reindeerland
XM4 5HQ
Why should SMEs care about employee communication and engagement?
I often talk to business owners about why they decided to start their own businesses in the first place and more often than not the answer is a combination of a deep set belief in being able to do things a better way, the desire to get out of a big corporate environment and/or the opportunity to make more money.
In the past many business owners saw the provision of employee benefits and engagement the domain of big business but over the last 5-10 years the vast majority of successful and vibrant businesses have got there by putting employee wellbeing, benefits and engagement at the heart of their employment and remuneration practices. But how and why has this been a successful strategy?
The UK is becoming an increasingly mobile and transient workforce and in order to attract and retain a quality workforce, companies can choose to pay higher salaries reducing their profitability, OR they aim to attract and retain staff by making the working environment more attractive.
By attracting employees solely by the size of the paycheques on offer, companies fill their ranks with employees who are more likely to be constantly looking for better paid jobs elsewhere.
By making your employees the core of your business, demonstrating to them continually that you put their interests and work-life balance at the heart of your decision making process and including them in the company vision, you can build a more loyal and hard-working workforce who might also act as your biggest advocates.
If asked who you would prefer to do business with, would it be an enthused, happy and motivated company representative or a clock watching employee who is probably looking around for a higher paid (but not necessarily better) job? Most of us can tell or judge instantly which of the two categories of person they are speaking to.
I know which one would get my business!
The Benefits of Employee Benefits
Achieving staff satisfaction and loyalty is not just about salary (although it helps!), it’s about the whole package and the culture that you as an employer provide. A great illustration of this are the results of a recent survey carried out by HR Grapevine which showed that 61% of staff would consider changing jobs to increase their holiday leave and 1 in 3 indicated that they would take a pay cut to secure more days off.
These latest findings bolster the case for ensuring good employee benefits to assist with recruitment and ultimately retention as well.
Most companies will be fully aware of the logistical cost of replacing an employee with expenditure such as advertising costs and agency fees, as well as invested time such as interviewing prospective candidates. But the money lost in productivity during handover and induction periods can spiral even further and this is a factor that is often not properly considered. A study by Oxford Economics last year estimated that these could run at an incredible £30,614 per employee.
With the costs of recruiting taking a serious chunk out of budgets SMEs should be reviewing how they can retain their staff for longer. Providing the right mix of employee benefits can be a critical component in a successful long-term plan for attracting and retaining employees, proving to be the competitive advantage employers need to succeed. And it needn’t cost the earth either.
Giving your staff access to these benefits will not just mean you increase your chances of holding on to them it can have the bonus of delivering improved business performance as well. Research has repeatedly demonstrated the links between the way people are managed, with the attitude of employee and business performance.
The EB Partnership can help by offering a wide range of services and benefits which can help your business as well as improve staff wellbeing.
Here are just some of the bonuses of providing good employee benefits:
For the employee:
- Increased self-esteem and sense of wellbeing
- Improved staff morale
- Increased productivity levels and greater engagement between staff
- Increased job satisfaction
- Reduced stress and reduced absences due to physical or mental illness/injury
- Improved general health and mental health
- Increased skills and desire to develop
For the employer:
- A framework for a well-managed health and safety programme
- Reduced staff turnover which reduces ongoing costs associated with recruitment and training
- Reduced levels of sickness absence resulting in improved productivity and a drop in additional costs associated with capacity shortage issues such as costs of temporary cover/training, missed deliveries/contracts and related reputational damage, reductions of morale/productivity of remaining team
- Increased engagement between all levels of the organisation promoting a greater sense of inclusion and idea-sharing
To find out about the way we work with our clients to ensure they are maximising the value from any spend made on employee benefits then just give us a call!
If Father Christmas was an employee ...
Pantomime season is upon us so a seasonal question for you: If you take on Father Christmas as an employee will he have to be auto enrolled?
There are a number of reasons why he should be (workforce harmony, simpler to administer pensions on the same basis for all staff etc.) but there are also a number of other considerations you could take into account!
For example, where is he ordinarily resident? Let’s assume he is resident somewhere other than the UK, then will he spend enough time in the UK to qualify as resident?! If he does, lets also look at the latest Directives from Europe regarding paying overtime and holiday pay (and given he potentially has up to 51 weeks holiday a year how do you plan for that!
We recommend that you take him on a short term contract until Christmas Eve and then you can safely avoid the earnings spike at Christmas. This, combined with using Postponement from day 1 until 3 months should safely see this situation avoided.
Also, is it likely that he only has one job given the very seasonal nature of his work?!
And let’s not forget his age! Given he is likely to be older than State Pension Age this makes him a non-eligible jobholder. But when you look again surely he is older than 75 and so outside the scope of auto-enrolment altogether!
Other considerations I have had include his means of transport – does that count as a company vehicle, and also what about the Grotto – is that given as part of the job and if so does he pay tax on the Benefit In Kind?!
In summary though – I imagine the Pension Regulator guideline is 'don't assume that because someone is a fictional character they are not classified as a worker for AE purposes.'