Some employers are searching for ways to offer a bigger range of workplace benefits,as this is known to be a way of improving employee loyalty and happiness. Saving products are one area that helps,as it improves the financial resilience of staff. But there are others options and they are more diverse than you might think.
In fact there are benefits that are nothing to do with pay and pensions,these including,free fruit,gym facilities and employee discounts.
Pay is obviously the main reason people go to work,but the second most important factor in modern life is,it turns out the pension being offered by an employer. Auto-enrolment has of course meant that most employees now have a pension of sorts,but there is interest in what businesses offer beyond the minimum.
Workplace ISAs – Most people know about ISAs or ‘Individual Saving Accounts’,but many are not aware that they can be available via their employer.
They have many advantages for employees.
- Staff can pay into their workplace ISA directly from their pay,this being easier for those who might otherwise just not be able to save.
- Managing pension and ISA savings is made easier.
- Those employees with high salaries,who may be in danger of breaching the annual or lifetime allowance for pension contributions (currently set at Â£40,000 and Â£1,055,000) can use a workplace ISA as a means to save more for retirement,which could otherwise attract a tax charge of 55% or greater.
There are problems in that Cash ISAs have very low-interest rates,but they are No Risk,which is a major benefit.
For those requiring a better return,Stocks and shares ISAs are a good choice,but the value of the investments can go down as well as increase,so employees could get out less than they put in.
Lifetime ISAs are perhaps the best choice as these can be either stocks and shares or cash. But they are only available to employees aged below 40. Their plus point benefit is that the government top-up the savings with basic rate tax relief.
Any ISA payment made by the employer (for a staff member) via the payroll,needs to be taxed as income and is subject to employer and employee national insurance. But of course,as the money going into the ISA has already been taxed,the growth and subsequent withdrawals remain tax-free.
Then there are General Investment Accounts (GIA).
GIAs may not be as well known as ISAs but they can be available and allow employees to take benefit of reduced charges and straight forward administration. The main difference between a GIA and an ISA is the way they are taxed. In a GIA any profits made from investments above relevant tax-free allowances are taxable.
A capital gain of up to Â£12,000 per year can be made tax free,plus dividend income of up to Â£2,000. Thus reasonably substantial sums can be invested in a GIA before any tax becomes payable,and unlike ISAs,there are no annual investment limits. GIA’s are mostly employed by higher earners who’ve reached their annual pension and ISA limits but are searching for ways to make the most of their tax allowances.
These are just some of the ways employers can stand out from the competition when wishing to attract new staff or to keep those that they already have.
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