Are salary sacrifice schemes still a viable employee benefit?
The employee benefits market has grown dramatically over the last couple of years, with organisations looking for new and improved ways to reward their employees, as well as engaging with the growing number of remote workers, but with so many options to choose from – gym memberships, dental plans, holiday purchase schemes – deciding on the right benefit can be a bit of a minefield. Whilst many of these benefits are nice to have, they may fail to generate the same feelings of joy and excitement as unboxing a brand-new iPad or plugging in a new 55-inch Smart TV.
In 2016, HMRC changed the tax legislation removing the substantial tax savings from salary sacrifice schemes, leading many to question whether these schemes would still be in demand or even viable. Five years on and the truth is our Technology Benefit is as popular as ever and it remains a fantastic way to drive employee engagement.
To help ease your concerns, we wanted to answer some of the common questions and misconceptions around Technology Benefits.
Myth 1. There are no savings to be made anymore
Untrue. Employees still make savings on National Insurance (up to 12% for basic rate taxpayers) and also on pension contributions, where applicable. However, the main appeal, besides the wide range of products, is the ability to spread the cost and make expensive items more affordable. And, unlike finance options available through other online retailers, there’s no high interest rates, which can be as much as 24.9%, or even more in some cases.
Myth 2. These schemes encourage staff to get into debt.
Untrue. In fact, it’s quite the opposite. Our scheme helps employees manage their finances and access much-needed tech, they wouldn’t otherwise be able to afford. Supporting financial wellbeing and budgeting, these schemes provide a safe, method of paying for equipment, giving staff an alternative to high street finance or ‘payday’ loans.
Limits on how much employees can spend are agreed in advance with you, the employer and staff are generally cautious on the value of goods they’re committing to. Despite many of our schemes having a limit of £3,600, we very rarely find employees spending above £1,500. We also ensure checks are made so that staff do not go below the level of the National Minimum Wage (or National Living Wage if aged 25 or over).
Myth 3. I don’t have the time or resource available to manage another benefit
Don’t worry, we will do all the heavy lifting for you. Once we’ve agreed the specific scheme setup details, our expert team of PRINCE2-trained project managers will handle everything from implementation through to order approvals. Think of them as an extra member of your team dedicated to running a successful scheme, leaving you time to focus on other requirements. We’ll also provide a full suite of marketing material at no cost, to help promote and communicate the new benefit to employees.
Myth 4. Our budget is already stretched, I’m not sure adding a new scheme is financially viable
We understand and this is not a problem. Our benefit is 100% cost neutral with no admin fees or setup charges. Some NHS organisations in England and Wales even make savings on employer pension contributions – for example, since 2011, Hywel Dda University Health Board have saved over £1.2 million through running our Technology Benefit. Plus, the marketing materials and ongoing support is provided completely free of charge.
Myth 5. It’s too risky, what happens if staff leave without paying the full value of the equipment
Limits on what employees can spend is agreed in advance with you the employer, and staff are generally cautious regarding how much salary reduction to commit to. Supporting financial well-being and budgeting, these schemes provide a safe, method of paying for equipment, giving staff an alternative to high street finance or ‘payday’ loans. We ensure checks are made so that staff do not go below the level of the National Minimum Wage (or National Living Wage if aged 25 or over).
Myth 6. Everyone has a computer these days, there’s no demand
Untrue. Our scheme offers much more than just laptop and desktop computers. Over the last few months, we have expanded our product range to offer even more variety and choice for employees, including new outdoor and garden equipment, small home appliances, kitchenware, fitness tech, home security and more. There really is something for everyone and to appeal throughout all ages across the workforce.
Click here to download our latest Product Overview brochure.