Advantages of Benefits for Employer and Employee

One of the major advantages for employers is an easing of their own cashflow. This is particularly the case if you introduce a salary sacrifice system, whereby employees give up a portion of their salary in return for other benefits. It may be possible to negotiate discounts with benefit providers if your workforce is large, and the provision of non-cash benefits can therefore be cheaper than the providing the part of the salary that the employee is sacrificing. Furthermore, there are potential tax advantages, although these are limited and potentially complex. More information on the tax implications of a benefits scheme are available elsewhere on this site.

Employee Advantages

Finally, tax advantages are extended to employees as well as employers. Through cooperation with your employer, you should be able to negotiate a benefits package that provides a tax advantage; for example, if your employer pays for your mobile phone, this is treated as a non-taxable benefit. Sundries such as this can represent a significant tax saving over the course of a year.

As an employee, it is important to remember that you may be pressured into accepting a salary sacrifice arrangement. You should only agree to this if the benefits being offered are useful, and you are happy with the price at which they are being offered (that is, the portion of your salary that you are giving up in return for the benefits). Further information on salary sacrifice is available in an article elsewhere on this site.

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