If you run your own small business you will have no doubts about your own skills and the amount of hard work you put in. But there are only 24 hours in your day and you need to depend on the skills and enthusiasm of your team.
Getting the right people is a challenge, and so is keeping them.
At Continuum, you can rely on us for expert help and advice with your finances when you run a small business. In this, the second of a series of articles on corporate financial planning we are looking at how employee benefits can help you build and retain the team you need.
Salary is not enough
Obviously, you need to pay your team the appropriate rate for the job they do. You may need to pay a little more for your very best people, to avoid the risk that your competitors will.
The Office for National Statistics (ONS) puts the UK median gross (before tax) weekly wage at £586. Skilled workers, professionals and those with key experience command more. Many professional bodies publish surveys providing a benchmark for salary scales. The main findings are usually freely available online.
But although salary is important, it is not the only factor. Additional financial benefits can make a big difference to staff retention and can often be provided more cost effectively than a simple salary. In the past, a generous company pension plan could be a powerful incentive, but this is no longer the case due to auto enrolment. However, there are a number of other benefits that you may be able to offer.
Group Life Cover
Most households would struggle financially if they lost a wage earner, but despite the risk, many UK adults have no life cover usually citing cost as the reason. It means company paid life cover or Death in Service Insurance is a valuable incentive. Offering group cover shows your employees you care about their welfare and takes a major financial responsibility off their shoulders.
Relevant Life Cover
A relevant life policy can offer the same kind of cover for directors and key employees, without the tax penalties.
The cover is considered a business expense and therefore reduces taxable profits, while policies are placed into a Relevant Life Plan Trust, making them tax efficient for both employee and employer. They do not require any contribution from the employee, nor count as a taxable benefit in kind, meaning employees can receive their cover without any kind of additional cost.
Because premiums are deducted before your profits are calculated, Relevant Life cover can reduce your corporation tax bill. They are also not liable for National Insurance. This means that both employers and employees can save with a Relevant Life policy
Group Critical Illness Cover
The risks of developing a serious illness is disturbingly high. Cancer and Heart attacks can strike without warning – according to Cancer Research UK, half of adults born after 1960 will get cancer.
Group Critical Illness Insurance pays out tax-free cash between 1 and 5 times an employee’s annual salary sum if they are diagnosed with a critical illness. Most policies cover around 12 critical illnesses as standard, with the top three claims being for cancer, heart attacks and strokes.
Private medical insurance
Covid has put the medical service under stress, but even before it struck, the NHS faced long waiting lists. At the end of March 2020, there were 4.24 million people on NHS waiting lists in England awaiting treatment. More than 20% had been waiting more than 18 weeks.
If a worker had to wait 18 weeks for treatment, this would have a considerable impact on their life – and your business. Company-paid Private Health Insurance gives staff access to healthcare in private UK hospitals letting them skip NHS waiting lists and get treated faster. It means reducing their suffering and getting them back to work sooner. It can be the benefit employees would most like from their employer.
Getting the cover you need
So how can you get the cover you need to support and retain your employees, get it for the best price and ensure that it is as cost-efficient as possible? The simple answer is to get our expert help.
Contact us at Continuum now. Having a financial expert on your side could do more than simply help organise all the benefits you want for less, it could help with every aspect of your business finances.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate taxation advice.
In most cases Relevant Life Plan premiums and benefits enjoy full Income Tax relief, National Insurance relief and Corporation Tax relief.
All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and Inland Revenue practice. Levels and bases of, and relief’s from taxation are subject to change.