Tax-efficient incentives to support staff retention


Tax-efficient incentives to support staff retention

This page was last updated on December 16, 2021
Retaining valued staff in a tough employment market is challenging, but there are a number of tax-efficient ways to help incentivise people to stay.

The Shipleys LLP team have put together this quick round-up of the key incentives.

Employee Pension Schemes

Contributing to an employee pension scheme is a highly tax efficient way to remunerate staff and often the most important benefit prospective employees look for.

Vocational Training

You can also help employees progress through their careers with tax-deductible vocational training that will reduce your corporate tax bill.

Mobile phones and home working

Providing staff with mobile phones is a useful tax-free benefit and if they’re home-working you can also pay them £26 a month tax-free allowance towards their expenses.

If an employee has to move home for work, you can pay them a tax-free relocation allowance of up to £8,000, albeit subject to strict HMRC qualifying rules.

Salary sacrifice schemes

These are where employees give up part of their salary each month to, for example, purchase a bike through the cycle to work scheme or payments into pension schemes – are a win-win as employees pay less income tax and both sides reduce their NICs.

Annual allowances

Make the most of the £150 per-person per-year social events and activities allowance to pay for occasions like office parties, without staff incurring benefit in kind liabilities.

Trivial benefits

HMRC’s trivial benefits rules allow you not to pay tax on a benefit for your employee of up to £50 if it isn’t cash or a cash voucher, and isn’t a reward for work of in the terms of their contract. This can be used multiple times through the year.

Don’t forget

It’s important to remember any benefits have strict rules and can potentially impact on employees’ tax and NIC liabilities, so speak to our team of specialists for expert advice before implementing them.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. Please talk with your usual Shipleys contact or get in touch with one of our specialists shown on this page.

Copyright © Shipleys LLP 2021

Current Issues

COUNTING DOWN TO THE 2023/4 TAX YEAR-END - 5 clocks showing different times

Counting down to the 2023/4 tax year-end

Some tax planning pointers to consider in the run-up to 5 April 2024.

Looking to the general election and potential fiscal changes

With the nation expected to go to the polls this year, and uncertainty around future tax policies, careful personal financial planning is important.
Changes for research and development tax breaks. Colourful digital lightbulb with connecting lines and dots

Changes for research and development tax breaks

A brief breakdown of what to be aware of with the recent changes to research and development (R&D) tax relief.