The Budget: Employee Benefits and Salary Sacrifice
November 2022 welcomed yet another budget – blink and you could miss them! The latest budget, unlike its predecessor, has an air of finality. The scariest watch of the year set the tone for how businesses and those who buy from us or work for us will live their lives over the next few years. There were few positives in the budget but plenty of warning, so you can help the team plan for the future. Let’s look at some of the key takeaways.
As budgets usually go, the devil is in the detail. You’re forgiven for thinking we had all made it onto Santa Rishi’s naughty list with nothing but coal to look forward to; So, how can you ensure your team feel that you realise it’s the season to give?
The cost of living continues to rise, with inflation in double figures on everything from eggs to oranges! However, you can help. Employee benefit portals are incredibly-low cost or even free to implement and give colleagues access to discounts from 4% off groceries to 40% off cinema tickets.
Tax bands
Tax rates remain static, but personal allowances will be frozen. This means that any pay increases will benefit the exchequer almost more than the colleague pushing millions more into 40% tax bands. However, you can offer salary sacrifice schemes, which allow colleagues to maximise their taxable pay and pay for certain bills before they are measured for tax. The scheme saves them on tax and NI, allowing your team to keep more of their pay.
Electricity and Petrol
Electricity and petrol have both surged in cost recently. The government have moved to absorb some of the electricity increase, but petrol continues to go one way. While it’s true that electricity has never cost more, it is also true that everything from heating to motoring is generally cheaper with electricity, with costs expected to reduce in 2024.
Electric cars
Lastly, let’s look at electric cars. The government ‘white listed’ electric cars via salary sacrifice in 2019. All of the savings were offset by a tax on the benefit and the low rates for this tax were set until 2025 only. In the budget, rates were set until 2028. While longer contracts will see an increase in the tax on the benefit colleagues can still save 35% with such schemes, making a new EV as cheap as running a 5-year-old diesel. Road tax will also apply from 2025, but again salary sacrifice includes this. In fact, the scheme includes everything but electricity!
All in all, you could be forgiven for thinking it’s not the season to be jolly. Although, where Santa Rishi has taken, you can give. Bolster your employee retention at no cost and ensure that any random ghosts of Christmas past, present, or future head where their attention is deserved; Downing Street!