Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Flexible benefits that attract staff

Faced with the skills shortage, tax-efficient benefits packages are a good way of attracting and retaining staff.By Karen Wood

The last few years have seen regular reports on the growing skills shortage faced by the construction industry. But what can your company actually do to respond to these concerns?

One response is to try to attract staff by offering flexible benefits packages, and two recent changes in regulation make this approach even more compelling:

The introduction of the Construction Industry Scheme (CIS) in April 2007 and the monthly employment status declaration mean some businesses may be feeling pressure to attract workers as employees rather than risk the tax and National Insurance Contributions (NIC) consequences of an employment status reclassification.

In addition, last October the pre-Budget report announced a phasing out of holiday schemes within the industry, whereby groups of employers contributed to independently-managed holiday funds. NIC savings for both the employer and employee were created as a result.

Ideas emerging

Some employers will now need to look at other ways of setting themselves apart in a very competitive skills market.

So what might a flexible benefits scheme look like and what incentives can be offered to employees without creating a tax or NIC charge? Here are some ideas that we have seen in the marketplace:

  1. It is becoming common for employers to offer salary sacrifice arrangements in exchange for an increased employer contribution to a company pension scheme. This has a benefit of cutting NIC costs, both to the individual and employer, and can often fund the implementation in the first year.

  2. Those struggling to meet the expense of childcare welcome the tax and NIC savings available via employer-provided childcare. The most convenient and inexpensive way of providing this is via childcare vouchers and salary sacrifice.

  3. Companies can consider green transport under a flexible benefit scheme. There are again tax and NIC savings on cycle to work schemes and possibly by providing work buses for their employees to commute to work.

  4. Work-related training can also be provided under salary sacrifice arrangements, allowing employees to invest in their own future by benefiting from relevant training that they might not otherwise be able to afford or have access to.

The benefit of training

The employer can either fund this wholly by salary sacrifice or by splitting the investment with the individual. As a bonus, work-related training can often be provided without attracting a tax or NIC charge.

  1. Most workers in the industry rely on their mobile phones. By extending the availability of the low tariffs available on corporate contracts beyond the essential users, employers could offer a very attractive benefit with no cost to the employer.

  2. A healthy workforce is a happy workforce. There is no tax and NIC cost in providing workplace meals, providing certain conditions are met and this may be enough to differentiate rival employers.
    Additionally discounted health screening could be offered, although at present HMRC are reviewing the tax and NIC implications where this is not offered to all employees.

  3. A flexible benefits scheme can also provide access to a wide range of discounts and benefits that they would not achieve individually, corporate discounts on shop vouchers, holidays, etc.

Karen Wood is assistant manager in tax at Deloitte