For employees, there are a wide range of incentives and benefits offered to you by your employer, or available to your company via Government incentives. However, millions of employees are simply unaware of this. At Alexander & Co, we are here to tell you about some of the simple ways you could be saving money in your working life.
Following Chancellor of the Exchequer, Philip Hammond’s announcement of the Autumn Statement 2016, some employee benefits have been scrapped, but a few substantial ones remain:
How does the Childcare vouchers incentive work?
Childcare vouchers are an employee benefit for all eligible working parents. Most employees participate in the childcare voucher scheme via the ‘salary sacrifice’. Here they accept the vouchers as a portion of their salary (up to £2,916 a year), as long as your cash salary doesn’t fall below the National Minimum Wage.
With the childcare vouchers, it means you won’t have to pay any Tax or National Insurance Contributions on that amount, allowing you to save more money.
How does the Employee pensions incentive work?
Most employees now offer access to a pensions at work scheme, and joining this scheme can be one of the easiest ways to save up for retirement. If your workplace doesn’t offer one yet, don’t fear, they will be compulsory over the next few years. To date over 7 million people have enrolled, and once you are enrolled not only will you pay some money into it, but so will your employer, as well as some Government tax relief.
For instance, if you were a basic rate taxpayer who makes a contribution of £80 to your pension, the Government tax relief will add another £20. This means you will find £100 for your pension pot, not to mention the money your employer contributes.
The amount you receive is dependent on your rate of tax. If you were a high earner for instance who pays tax income at 40%, you would only nearly to contribute £60 to receive £100 for your pension
You can opt out of this if you want. However, it would mean losing out on employer and government contributions – which is essentially free money towards your retirement.
How does the cycle to work incentive work?
For UK cyclists, this is a really handy way of saving a large sum of money off a bike (up to 42%).
Essentially, your employer buys a bike for you to ride to work. You then ‘hire’ this bike through ‘salary sacrifice’ and at the end of the hiring period you can buy the bike outright from your employer at a great price, continue to hire it for free, or simply give back.
This incentive means you can have a brand new bike right now, without initially spending a penny.
The salary sacrifice, again means you are not paying National Insurance and tax on monthly fees. In other terms, your salary sacrifice is made from your gross salary and not your net.
If you have any queries regarding what Government perks and incentives you feel like you may be missing out on as an employer, feel free to get in touch with us and arrange a meeting.