Too many businesses are missing out on opportunities to save themselves and their employees money during the recession, a tax expert has warned.
Stephen Charles, tax manager at Sheffield-based independent chartered accountants Hawsons, of Glossop Road, said that more employers should be optimising the potential for tax-free benefits, particularly at a time when many are struggling because of the downturn in the economy.
“Salary sacrifice schemes, where an employee forfeits part of his or her salary in exchange for a benefit such as a mobile phone for personal and business use, free car parking at or near the place of work, nursery provision for their children and interest -free personal loans are an example of how the employee and the employer can save money because, unlike the forfeited income, the benefit is not subject to tax or national insurance.
“If, for instance, an employee agreed to a reduction in gross pay of £55 per week for a year in exchange for a weekly child care voucher with a value of £55, there could be an annual saving for a basic rate taxpayer of more than £900 a year. The employer would also save employers’ national insurance of almost £400.”
All salary sacrifice agreements, says Stephen, have to be part of a properly structured remuneration package.