In direct contrast to the government’s announcement this week that salary sacrifice schemes, such as mobile phones, gym memberships cars and health screenings for employees will no longer attract tax savings, research from benefits provider Grass Roots has finds that 64 per cent of employees think that the government should make employers offer more benefits and 65 per cent believe that it should happen via a salary sacrifice scheme.
However, the research, which surveyed 1,000 employees, also finds that UK workers are confused by the term salary sacrifice, with a fifth unwilling to ‘sacrifice’ their salary. This demonstrates the need for a rebrand of the schemes, according to Stephen Holt, commercial director at Grass Roots.
Holt says, ‘The word sacrifice conjures up negative connotations misleading employees into thinking that they are giving something up, when the opposite is true. By buying your products direct from your salary, whether that’s the latest mobile phone or bike, employees are able to make savings. It’s time to re-brand, stop talking about salary sacrifice and start talking about salary maximise.’
Holt adds, ‘Salary sacrifice uptake has been on the increase over the past few years causing HMRC and the government to review the schemes. Despite this week’s ruling, benefits are clearly important to the UK workforce: 84 per cent rate benefits as important in keeping them in their job, and as such we need to ensure that it’s as simple as possible for employees and employers to access these.’
Following HMRC’s consultation on salary sacrifice schemes, the government has this week confirmed that employees will no longer benefit from tax savings for phones, gym memberships cars and health screenings bought via salary sacrifice schemes.
Mobile phones will continue to attract National Insurance (NI) relief so the employee can save up to 12 per cent. Nearly a quarter of those surveyed state that a mobile phone helps them to work productively and efficiently.
The government confirms that it would protect a number of schemes including with pensions, childcare vouchers, and cycle to work schemes. The changes to mobile phone schemes will come into place in April 2017 ensuring that any current schemes can run their course until April 2018 without issue.
Holt adds, ‘Employees will still be able to benefit from technology schemes, such as our Techscheme that provides all of the latest gadgets including mobile phones, ready for employers to offer to their workforce free of charge. Techscheme is already designed in the way that HMRC have proposed for some benefits – that is National Insurance relief for employees only. ‘
Employers who wish to offer their employees smartphones with both NI and Income Tax savings can do so until April 2017.
Further reading on employee benefits
