The new tax year is often the time when significant focus is placed on personal finances, however it is also the ideal time to take stock for your business. Which areas should you consider and what strategic thinking in relation to your Employee Benefits should you take for the 2017/2018 tax year?
Here are a couple of areas to consider:
Salary Exchange Review
Legislation introduced in the finance bill 2017 ends the current income tax and employer national insurance savings linked to many benefits in kind when provided via salary sacrifice. If your employees buy benefits through flexible or voluntary benefits this change may affect you. Some benefits remain exempt from the changes including pensions and childcare vouchers however some will be impacted by the changes including health assessments, mobile phones and car schemes.
As an employer it’s important to understand which benefits are impacted and when to make changes to your payroll/HR systems. The new rules take effect from April 2017 however protections exist if already in place until either a trigger point or April 2018, or even in some circumstances April 2021!
Employers should take this opportunity to review their arrangements and wider employee benefit program to ensure not only taxation and legislative compliance but importantly to assess the value and engagement levels of the benefits currently on offer to employees.
During 2017 as an employer you are likely to work through the company budgeting process. A continued frustration for FD’s is a miscalculation of costs. Therefore being prepared with information regarding potential increases in your benefit spend will be appreciated.
From April 2018 minimum contribution levels for workplace pension contributions increase to a total requirement of 5%. It would be prudent to review the exact cost implications for this increase and any upcoming re-enrolment requirements that may arise. LEBC Employee Benefits can support you in understanding the impact of these changes and provide advice on the structure of your workplace pensions and its continued governance.
Workplace Pension Default Investment Options
Not specifically tax year related, but an increasingly important topic for both employers and employees is workplace pension investment strategy. With pension freedoms in place and more flexibility than ever, employees are in need of stronger guidance and advice surrounding their retirement planning and, importantly, the accumulation planning. What, as a diligent employer, are you doing to ensure you engage with employees in this regard and how are you able to demonstrate via a robust governance process that the default investment fund is suitable for your workforce demographic?
Employees Tax Trip Wires
With more complexity introduced around pensions taxation, employees now need to be proactive in relation to their personal tax circumstances. With reduced Annual Allowance, Life Time Allowance, Tapered Annual Allowances and Money Purchase Annual Allowances (Phew!!), many employees are struggling to navigate the new tax trip landscape.
To remain a competitive employer it is now more important than ever to ensure your employees have the flexibility they need to join and leave the pension scheme to meet their own tax circumstances but equally it’s important that they understand the challenges they may face. Strong and engaging communication with your employees on the pension landscape is imperative to guide your employees safely through the maze.
Insurance Premium Tax
IPT is quite frequently an overlooked and undocumented tax but the treasury clearly has its eyes set on driving it higher. From June 2017 IPT will increase from its current level of 10% to 12%, this latest increase confirms an eye watering 100% increase since 2015! This rise will affect many personal and corporate insurances and will have a particular impact on increasing costs of group medical insurance. As a company your medical insurance costs may now be rising out of control with medical inflation and IPT compounding the problem.
There is no better time to review the structure of your medical insurance to identify how you can control costs whilst delivering an engaging and valuable benefit for your employees. And yes you guessed it ... LEBC employee benefits can help!
LEBC Employee Benefits can support employers with consultancy services across the benefits spectrum, from pension advice for employers and employees to communication programs and flexible benefit solutions. For more information do not hesitate to contact your local branch.
Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment or product for your circumstances please contact an adviser. The Financial Conduct Authority does not regulate tax planning.Back to News & Views