Kirk Rice Blog

Workplace Benefits: Keeping & Attracting Talent Written on October 21, 2024 by Michael Powell

Finding, hiring and training good people can be costly. Great team members can take your business to the next level. We're often asked by business owners what options are available to boost staff retention and recruitment.

What Options are Available? 

• Life assurance (often referred to as death in service) – pays cash to beneficiaries who may otherwise be in immediate financial difficulties.
• Serious illness cover – pays cash sum to the employee which again can offset the financial impact of being off work, facing additional costs including paying for medical treatment sooner than the NHS can provide or when it’s not available in the NHS. 
• Income cover – an insurance company pays sick pay on your behalf to the employee, provides a rehabilitation support including a monitored back to work programme. 
• Private Medical Insurance – access to private healthcare for employees and their family. Can include optical and dental cashback schemes and worldwide travel insurance. 
• Employee Assistance Programme – a package of support for employees including counselling; debt management; health and lifestyle guidance and information; private GP appointments at a time to suit them and your business. 
• Discount goods and services – usually included with one or more of the above benefits – enables employees to use group buying power on everything from weekly shopping to furniture and holidays. 

Each of these benefits serve different purposes, have different tax treatments, and have many different options associated with them. The purpose of this article is to help you understand what is available, and whether any of these would be a good fit for your business. 

You could also include paying more money into employees’ pensions than the statutory minimum requirement (3% pa for most employers). 

As an employer you can pay for anything you wish for your employees but take tax advice first as there will be PAYE Income Tax and National Insurance Contribution consequences. 

Life Assurance (Death in Service) 

The simplest and cheapest benefit for groups from as few as 2 employees. Usually paid as a multiple of salary, it gives peace of mind for employees knowing that if anything was to happen to them, their families receive a lump sum to assist with funeral planning, clearing debts, helping them deal with the reduction of income or and give a financial breathing space. 

The cost of the plan is a deductible expense, and the benefit is paid tax free to the beneficiaries. 

Serious Illness 

Usually paid as a multiple of salary, it gives peace of mind for employees knowing that if anything was to happen to them, they are not immediately at risk of losing their home when they cannot work and meet the bills. 

The cost of the plan is a deductible expense for the employer, but the employee pays benefit in kind tax, whilst the employer meets the National Insurance contributions. 

Income Cover 

In the event of an employee being off work through sickness or following an accident the cost of maintaining pay as well as another employee to do the work will reduce your profit and potential for dividends. An insurance company will pick up the cost of paying salary after say 3 or 6 months and support the employee back into work with mental health and rehabilitation specialists. 

The cost of Income protection is an allowable business expense and does not create a benefit in kind tax charge. On a claim the insurer pays the monthly benefit to your business. 

Private Medical Insurance 

Easily the most popular with shareholders and directors. Often considered ‘expensive’ when employees choose personal plans a group scheme usually achieves discounts of 50% on costs. The plan will provide easy access to treatments like physio and a suite of resources which ensure staff get better quicker, stay healthy and stay in work! 

The cost of the plan is a deductible expense for the employer, but the employee pays benefit in kind tax, whilst the employer meets the National Insurance contributions. 

Employee Assistance and Discounts and Perks 

These are usually included in some of the above schemes or bought separately. The cost is an allowable business expense and does not create a benefit in kind tax charge. 

Paying for other expenses on a discretionary basis 

If the employer buys something or a service for an employee, they will also pay the employee’s income tax and national insurance due on the value provided in addition to normal employer national insurance. Tax advice is required to determine whether the expense is deductible. 

This gives you an overview of some common options. Our experts can design schemes to suit your business and boost attraction and retention of great talent. We can also provide tax advice. 

Get in touch with us on 01344 875 000 or email us at info@kirkrice.co.uk 

Please note: This article is correct as at the publication date. The answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The information is based on current tax legislation which may change in future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of relief from taxation are subject to change. The Financial Conduct Authority does not regulate tax planning.