Feasibility study for a flexible benefits scheme

Produced by Tolley in association with

Employment Tax

Guidance

To consider setting up a flexible benefits scheme (see the Flexible benefits schemes ― an overview guidance note), it is important that employers are both aware of the consequences of the scheme and have checked that the relevant systems are in place.

Many employers simply consider flexible benefits schemes to be a straightforward method for delivering employer’s National Insurance savings through salary sacrifice (see the Salary sacrifice arrangements ― overview guidance note) but the reality is that in most cases, full prior consideration should be given to the consequences of the scheme. The most appropriate method is to undertake a feasibility study.

Flexible benefits v voluntary benefits

A flexible benefits scheme can cover benefits provided by salary sacrifice or benefits made available to employees to purchase from their net pay by taking advantage of their employer’s purchasing power (known as ‘voluntary benefits’) or a combination of the two. Consideration must be given to the basis on which the benefits will be provided and therefore the tax / NIC consequences of either approach.

Voluntary

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Robert Woodward

Employment Tax Manager at Frank Hirth plc

Robert is an expert in UK employment tax matters for employers with UK based employees, including UK employees working overseas, and overseas employees coming to the UK. He has extensive experience of advising clients with regards to PAYE matters, employee benefits and social security as well as employment related payments outside the payroll functions such as termination settlements and payments to consultants and other non-payroll labour. After graduating in Politics and Law from the University of Southampton, Robert started his tax career at HMRC as an employer compliance officer undertaking enquiries into employers' expenses and benefits systems before moving into a large international practice and then into the Big 4. Here he assisted with tax investigations, flexible benefits planning, employment tax compliance and international social security. Robert has presented to various audiences and has had a number of articles published in various magazines on employment tax matters. Robert is a fully qualified member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CTA).

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