Money and vouchers
Money talks. It says ‘we value and appreciate your efforts’. Both hard cash and vouchers are direct and easy benefits to give. Both work best as short-term incentive and reward for meeting targets, etc. And in both cases, presentation is important. It’s much better to hand out the reward personally, explaining why it’s being given, than to slip it unannounced into the wage packet.
All cash bonuses go through the PAYE cycle. Cash bonuses are also subject to National Insurance contributions (NIC).
Vouchers take more admin effort than money, but the employee is more likely to spend these on treats rather than bills. Vouchers are no longer exempt from NIC. There’s a huge variety of vouchers now available – for high street retail, childcare and day trips, to name but a few.
Company cars have massive status value. They are still popular perks, despite efforts by government to make them less so. The employer pays NIC on cars, and used to pay tax based on its list price and business mileage. However, cars were often driven simply to increase the mileage, because the tax percentage fell as mileage rose. To thwart this, tax is now based on carbon monoxide emissions, not on mileage, following a reform of the company car tax system in 2002.
This is an important perk if you want to retain staff you’ve already invested time and money in developing. It also gives your company a supportive image, helping to attract high calibre people. Consider childcare vouchers (exempt from NI contributions), providing nursery places, or even getting directly involved with childcare provisions, perhaps in partnership with other local companies.
Season ticket loans
These are much appreciated in cities and areas where the commute to work is a big part of the day. Easy to set-up, the company pays upfront for commuters’ travel costs and recoups the money through monthly payroll deductions. Annual season tickets work out to be much better value than monthly passes (although the upfront investment required is prohibitive to most workers). By doing this you are saving your staff member money on their monthly travel costs.
Again, this is easy to set up. Just negotiate a group discount with a local health club and pass the saving on to employees. Fitness is becoming increasingly popular, and staff may be more productive if they sweat away work stress at the gym.