Good employers have been offering workplace benefits for a long time. There are many reasons for doing so, with one of the main ones being that a strong employee benefits package attracts the right talent. However, how can you determine which benefits your employees actually want?
You might not have considered how providing benefits to your employees can foster a sense of trust. It shows that you care about your team and believe in the business you’ve built together. By investing in their overall well-being, you’re not only supporting them but also creating an environment that attracts the right people to join you.
What benefits do I provide to my employees?
The benefits your employees actually want will depend on both you and them. There is no right or wrong answer. Some employers hand out a menu to their employees, and they can choose what benefits they want.
However, this option is not for everyone. It adds administrative burden, and you must be careful that everyone is treated fairly.
A simpler way to look at it is to establish what benefits deliver the best benefits. You can find our top recommendations of benefits your employees actually want here.
The traditional benefits like private medical cover and death-in-service benefits remain popular, but salary sacrifice schemes, particularly for electric cars, are gaining traction.
The main advantage of offering a salary sacrifice scheme is your employee saves on tax and both of you save on National Insurance (NIC). This is a huge saving given that employer’s NIC rates are going up next year.
Electric cars remain a popular choice for company cars. The reason is that the 100% electric car currently only attracts benefit of 2% in the current tax year, increasing to 3% from next year. You can find full guidance on how to calculate the tax on company car here.
Reporting employee benefits to HM Revenue & Custom (HMRC) – Form P11D
Some of you may already know about reporting benefits using forms P11D. If you are unfamiliar with this process, it involves reporting certain financial benefits, such as a company car or medical benefits, and you pay Employers’ National Insurance Contributions (NIC) on the benefit portion.
You must provide your employees with forms P11D and submit form P11D(b) to HMRC, along with the payment for Class 1A NIC. The deadline for this process is in July each year. Please have a look at our guide for more details.
We have had the option to process benefits through payroll for a few years now. However, we have not recommended this option to many of you because HMRC does not have a system in place to handle certain benefits, such as the director’s loan account. They also lack an alternative method for calculating and processing the collection of Class 1A NIC.
From April 2026, the government proposes to put all benefits through the payroll. We’ve previously written a blog on this subject and we strongly recommend that you have a read if you are currently completing forms P11d’s.
If you want to do a test run and start payrolling benefits, you can only do so right at the start of the tax year. This means you need to write to HMRC early in February for 2025-26.
You need to understand how to payroll benefits, what systems you have in place and what further help you need.
We have not received much guidance from HMRC, but we will keep you updated as we do. As usual, our social media pages on LinkedIn, Facebook, and Instagram will be updated regularly with information too.
What’s next
If you are not already providing some benefits to your employees, it is a good time to think about it. With the expected increase in Employers NIC from next April, Salary sacrifice schemes will become an essential part of remuneration and benefits planning for your team.
A well-structured remuneration package can enhance employee satisfaction and, if planned correctly, may also provide tax savings.
It would help if you took advice before assembling an employee package. If you are working with us, email your normal manager. If you are not yet working with us here’s how we work, and we will be happy to help you.
We can also help you with deciding whether or not to payroll your benefits next tax year. Please contact our head of payroll Priya at priyar@myersclark.co.uk.