Publications that covered this story include the Mail on Sunday, on 23 July.
- Benefits in kind coming back after economic slowdown
- Value of perks rising twice as fast as wages
The value of staff perks and benefits has risen above the £8bn threshold for the first time this decade, as businesses continue to relax cost restraints following the financial crisis.
The value of taxable benefits given to employees as part of their remuneration packages has increased by 5.3% to £8.04bn in 2015/16 from £7.63bn in 2014-15 (see graph below). This was more than twice as fast as the rise in average wages, which rose just 2.2% over the same period.
Staff benefits include perks like company cars, free accommodation and private medical and dental insurance, and often have a lower tax rate compared to if the value of the benefit was given to the employee as salary.
The 10% increase in employees receiving private medical insurance over the five years to 2016 and dental care benefits to 2.43m from 2.21m people was one of the biggest increases, as the UK’s ageing population continues to take its health more seriously.
Company cars continue to be the highest value benefit, increasing 18% over the last five years to £4.32bn, despite the number of people claiming this benefit only increasing by 1%. This increase was also in the face of high levels of tax, up to 37% of the value of the benefit for cars with the least green credentials.
Andrew Snowdon, Head of Corporate Tax in our London office, comments: “After a lull in the use of job perks during the credit crunch and its aftermath, businesses are now getting back to using taxable benefits as a way of recruiting and retaining top talent.”
“The increase in the number of people receiving private medical and health care coincides with a period where people are living longer and realising that they need to take care of themselves and their families. It is something that many employees would not consider using if it was not in their remuneration package and is therefore a very popular perk.”
“While company car tax rates are now relatively punitive, the group of people using them has actually grown slightly over the last five years. For some, the prestige of the perk outweighs the tax bill.”
“The increase in taxes on company cars by HMRC has been part of a broader ratcheting up the tax burden on perks across the board, eroding their tax advantage over standard income.”
Value of ‘employment perks’ tops £8bn