Employment Tax

Feasibility study for a flexible benefits scheme

Produced by Tolley in association with Robert Woodward
  • 21 Dec 2021 16:42

The following Employment Tax guidance note Produced by Tolley in association with Robert Woodward provides comprehensive and up to date tax information covering:

  • Feasibility study for a flexible benefits scheme
  • Flexible benefits v voluntary benefits
  • Tax considerations
  • Projected savings
  • Pay issues
  • Systems considerations
  • Employment law
  • Other third parties
  • Preferred terminology
  • Proposed launch date

Feasibility study for a flexible benefits scheme

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 benefits are generally those where salary sacrifice is not necessarily the most appropriate, eg benefits to which employees do not wish to be tied in for a minimum period. There are few tax / NIC considerations applicable and as long as the employer requires the employee to make good (ie repay) the tax cost to their employer of providing the benefit, there is no tax or NIC liability.

Tax considerations

Clearly, the first point to consider

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Reduced VAT rate ― supplies of fuel and power

The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel

22 Dec 2021 18:49 | Produced by Tolley Read more Read more

Quick succession relief

What is quick succession relief?Quick succession relief (QSR) reduces the tax payable when the same property has been subject to more than one charge to IHT. It applies where there have been two chargeable transfers on which tax is payable within a period of five years.Although commonly called QSR,

19 Oct 2021 23:10 | Produced by Tolley Read more Read more

Missing trader intra-community fraud (MTIC)

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s

21 Dec 2021 16:45 | Produced by Tolley Read more Read more