There’s no one-size-fits all approach to picking the best benefits for your team. But once you’ve chosen a core set of perks to help them day-to-day, adding a set of voluntary or “salary sacrifice” benefits (i.e. ones your team pays for themselves) can help your team pick exactly what works for them, without breaking your budget.
There are hundreds of options out there, but most of them involve lots of admin on your end. It can be a big time suck to sift through everything so you can find the best fit for your business.
To make things easier for you, we’ve put together a super-clear guide to the top 7 voluntary benefits out there. Keep reading to find each one with a quick sum-up of the tax savings, the NI saving and benefits-in-kind (BIK) exemption, and info on how you can go about sorting it for your team.
Transportation 🚲
1. Cycle to work scheme
Taxpayer savings rate range: 32%-42%
Employer national insurance saving? ✅
BIK exempt? ✅
Cycling is an increasingly popular way for people to get to work. It’s good for your health, the environment, and in these post-covid times, it’s a nice way to avoid germs on the commute too! A cycle to work scheme lets your team save up to 42% on the bike of their dreams (or a regular bike, for that matter).
How it works: First you’ll need to find a cycle scheme provider to partner with. How much an employee can spend per bike is up to you. They can then get a certificate for the value of the goods being purchased, and your payroll team will process the salary sacrifice. You’ll pay for the bike upfront, but it’s good to know that all providers offer a finance option if you need it.
2. Electric car scheme
Taxpayer savings rate range: 32%-42%
Employer national insurance saving? ✅
BIK exempt? ✅ (for 2020)
With the ever-growing support for climate preservation, more and more people are keen to make their daily travel as eco-friendly as possible. But if driving is the best way for them to get to work, helping them buy an electric car can help them get from A to B with a clear conscience.
How it works: You can sort everything out with a car leasing provider. You can set up partnerships with as many leasing companies as you like, or you can just go for one. It’s up to you how much each employee can spend, and within that it’s up to them which car and package they go for (normally including insurance and maintenance). You get charged monthly and then deduct your employees monthly payment from their salary.
Now’s a good time to go for it too, as there’s no BIK tax to pay for 2020/21, however a tax of 1% will be introduced in 2021/22 and which will rise to 2% in 2022/23.
3. Car maintenance
Taxpayer savings rate range: 2%-12%
Employer national insurance saving? ❌
BIK exempt? ❌
The average annual spend on car repairs is over £300, so if anyone in your team relies on driving to get to work or to do their job, helping them with the cost can take a big worry off their mind.
How it works: You’ll need to partner with a Halfords approved benefits provider if you want to offer this as a staff benefits scheme. You set the parameters of the scheme and decide exactly how much an employee can spend annually. As and when maintenance or servicing is required, the employee must use a Halfords branch. As with most salary sacrifice schemes, the employer will need to pay for the goods upfront and deduct via payroll. As this scheme is not exempt thus the employer will need to make NI contributions and report the benefit on the P11d.
4. Car parking
Taxpayer savings rate range: 2%-12%
Employer national insurance saving? ✅
BIK exempt? ✅
If anyone on your team drives to work, parking can add up to one of the priciest parts of their commute. With a parking scheme, you can help them save up to 12% a year, which can add up to huge savings over the course of a year.
How it works: You don't need to partner with a benefits provider to offer this to your team, but by doing so can help your employees save more overall. Depending on how the car park charges for spaces, you can either deduct the monthly fee via payroll or pay in full for the year and make deductions over a 12-month period. As this scheme is not BIK exempt, you still need to make NI contributions and report the benefit on the P11d.
Discounts 💰
5. Techscheme
Taxpayer savings rate range: 2%-12%
Employer national insurance saving? ❌
BIK exempt? ❌
Some call them toys, some call them vital work equipment. Either way, laptops, desktops, smart phones, extra monitors and printers all play pretty important roles in our daily lives. Offering employees the option to sign up to a techscheme helps your team save up to 12% on any equipment they choose - from an Apple Watch to a TV.
How it works: You'll need to partner with a provider to offer this as a work benefit. You set the parameters of the scheme and decide exactly how much an employee can spend on their tech. The employee selects their budget and tech retailer via the scheme provider, once approved by the company they can go out and purchase the goods. As with most salary sacrifice schemes, you’ll need to pay for the goods upfront and deduct via payroll. As this scheme is not exempt thus the employer will need to make NI contributions and report the benefit on the P11d.
Family & kids 👨👩👦
6. Workplace nursery
Taxpayer savings rate range: 32%-42%
Employer national insurance saving? ✅
BIK: ✅
If a few people on your team are parents of young kids, setting up a workplace nursery can help relieve one of their biggest mind-aches. They’ll save time dropping off and picking up their children, and with up to 42% tax savings (nearly twice as much as the government’s childcare scheme) it’s the cheapest childcare option out there, giving them more time and energy to focus on their role and their wellbeing.
How it works: As an employer, you can open a workplace nursery on-site or partner with a provider. Working with a provider is the most popular option as they can take away the admin burden of managing a scheme - and they know how to change nappies. After you’ve set it up, your employees can choose to send their children there and you’ll get a monthly invoice for the care provided, which you deduct from payroll as a salary sacrifice.
Health & wellness 💪
7. Gym membership
Taxpayer savings rate range: 2%-12%
Employer national insurance saving? ❌
BIK exempt? ❌
Whether they prefer deadlifting, tearing it up on the treadmill or rowing the distance of the channel on the ergometer, going to the gym is a central part of lots of people’s health routine. Being fit boosts focus, energy levels and mood too, so making their membership less of a financial burden can work to bring value right back to your business.
How it works: You don't need to partner with a provider to offer a gym discount scheme, but if you do there’s more opportunity for your team to save more through discounts. You’ll be billed monthly, and your payroll team can then deduct the monthly amount from your employees’ payrolls. As this scheme is not BIK exempt, you’ll still need to make NI contributions and report the benefit on the P11d.
So there’s our top 7 voluntary employee rewards schemes. If you’d like to find out more about the tax offerings, the government’s info on tax deductions lays out the facts clearly.
Of the above options, the most popular schemes to offer to a diverse team are cycle to work, techscheme and childcare, and you can find out more about the best providers in the market here. As most of these benefits are issued via salary sacrifice, we’ve also put together a handy guide to help you get started.
Offering voluntary benefits, especially if you’re on a tight budget, gives your team a wide choice. They can get sorted with exactly what they need, without your company overspending on benefits that most won’t get used.