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Enhancing Employee Benefits - Cost Neutral Ways
As part of our fully joined up service, we look at the activities we undertake for clients - and then reverse our viewpoint to make sure that we are looking at matters from a client’s point of view.
In taking this approach, we come across recurring themes. One of the most common at the moment, from our corporate clients, is how to retain and motivate good quality staff.
Most employers recognise that staff benefits are of increasing significance to their employees but the cost of providing benefits can be substantial.
When, as now, cost limitation is crucial, what can employers do to provide extra benefits without incurring costs?
There are cost neutral ways of enhancing your employee benefit packages. Our Top Five are:
Pension Scheme
If you offer a pension scheme to your staff, why not consider allowing them to salary sacrifice their pension contribution? On a cost neutral basis you can enhance the amount they pay to pension by paying the National Insurance saving to the pension provider rather than to HMRC.
Bike to Work Scheme
The Bike to Work scheme allows employees to purchase a new bike but by paying it from gross salary – thus saving income tax and National Insurance.
Childcare Vouchers
Childcare vouchers offer the chance for employees to pay for nursery or after school care from their pre-tax salary. The obvious benefit is the tax and National Insurance costs - these savings can amount to £1,195 per annum per parent.
The cost of these schemes are typically contained within the Employers’ National Insurance costs – so this valuable benefit can end up being cost neutral to the employer.
Private Medical Care
Corporate rates for Private Medical Insurance are typically 30% lower than individual rates so by allowing your staff an opportunity to pay for their cover via a company scheme, you will be saving them money.
Workplace Car Parking
Often, somewhere to park near the work place is a distinct advantage for staff and many already choose to pay for such a privilege. In making a salary sacrifice arrangement to cover this cost, you staff will significantly reduce their outgoings.
Employees will naturally have to consider the effects of salary sacrifice and you, as their employer, may need to review your contracts of employment. Such contract reviews are routine issues for our Employment and HR teams.
If you would like to introduce cost neutral employee benefits schemes, please contact Ian Ody.
More information from Ian Ody: .(JavaScript must be enabled to view this email address)
WJM Appoints Two New Partners
WJM has appointed 2 new partners, Andy McFarlane and Fraser Gillies. Both appointments take effect from 1st February.
Andy is taking over as Head of the WJM Energy Team in place of David Bone, who is leaving the firm for pastures new. The new team will have 4 partners, including Fraser who will also lead the firm’s growth in planning law and continue to develop a broad practice in commercial dispute resolution.
In further changes, Ken McCracken has been appointed as Chief Executive and Graham Bell as Deputy Chief Executive. The new team will be driving the firm forward with its client centric strategy of providing inter-disciplinary teams to look after the needs of the firm’s broad range of clients.
“The client-centric approach changes the way that WJM lawyers think and act”, explained Ken McCracken. “It’s an alternative business model to the conventional idea that our client’s affairs, whether they are a major corporate, a family enterprise or a private individual, can be best looked after by breaking everything down into different specialisms. This can too easily lead to fragmented advice which doesn’t always suit the client.”
Ken continued, “Obviously our lawyers will continue to provide a high level of expertise, but we want to go further and make sure that all this expertise is joined up and mobilised in service of the needs of our clients. None of our clients view their affairs as just a series of technical problems to which there are technical answers. Our client centric approach and the new profiling tools we’ve developed to make it work, challenges us to engage with the Big Picture, from the client’s point of view”.
More information on the Energy team from Andy McFarlane: .(JavaScript must be enabled to view this email address) or from their web page at Renewable Energy
Furnished Holiday Lets - Tax changes mean owners need to act now!
If you own a holiday home which you let out or you run a business letting holiday property then you need to read Susan Hoyle’s Briefing Note on changes to the tax regime for furnished holiday lets.
The article is below and you can download a PDF Version here for reference.
Furnished Holiday Lets – Tax Changes
How do they affect owners?
In the 2009 Budget, the Government announced that special rules for taxing furnished holiday lets (FHLs) were to be abolished with effect from 6 April 2010.
In the meantime, until 6 April 2010, the existing FHL rules have been extended to include qualifying properties not just in the UK, but also anywhere in the European Economic Area.
The Current Rules
Under the current rules, the letting of qualifying holiday accommodation is treated as a trade for tax purposes. This has a number of advantages such as:
- allowing losses from the FHL business to be set off against other income;
- the profits being treated as relevant income for pensions purposes;
- the ability to claim capital allowances on furniture;
- the potential to reduce the rate of capital gains tax on sale from 18% to 10%, or to defer any capital gain arising on a sale or transfer of the property.
The letting of holiday accommodation will qualify for this treatment if it meets the following conditions:
- the property is let on a commercial basis;
- it is available for letting as holiday accommodation for at least 140 days in the tax year, and is actually let as such for at least 70 of those days; and
- if the same person occupies the accommodation for a continuous period of more than 31 days, then the aggregate of all such long-term occupancy must not exceed 155 days in the tax year.
What do the changes mean for you?
If you let furnished holiday property situated outside the UK, but in the European Economic Area, and the letting meets the conditions outlined above, you should review your tax affairs to see if there are claims for tax reliefs you can now make for previous years which you could not make at the time.
After 6 April 2010, for individuals, partnerships and companies who let furnished holiday property in the UK or in the European Economic Area, the changes will generally mean that:
- the losses from the FHL business can no longer be set off against other income – the losses can only be set off against profits from that business;
- the profits from the FHL business will no longer be treated as relevant income for pensions purposes;
- you will no longer be able to claim capital allowances in respect of furniture – instead you will be able to claim as a deduction from profits a wear and tear allowance of an amount equal to 10% of the net rent from letting the property;
- you will not be able to reduce the rate of capital gains tax from 18% to 10%, or to defer any capital gain arising, on a sale or transfer of the property.
Notwithstanding the changes to the tax treatment of FHLs, where the intention is to let for short periods totalling 140 days or more you will remain liable for business rates rather than council tax.
What should you do?
It will be possible to retain the current tax advantages after 5 April 2010, if you can show HMRC that you are, in fact, carrying on a trade rather than a property business. In order to show this you would need to provide services over and above those normally provided by a landlord – such as regular cleaning of rooms when they are let, and not just between changes of tenant, the regular supply of clean linen, the regular provision of meals – similar to those provided by hotels.
In the meantime you should consider:
- the timing of expenditure, maximising expenses such as repairs (and therefore losses) in the current tax year if you have other income or gains in 2009/10 and 2008/09 that you can off set against the losses;
- reviewing existing borrowings to ensure that they will be tax efficient;
- transferring properties with large unrealised gains or development value to the next generation before 5 April 2010 and holding over the gain.
More information from Susan Hoyle: .(JavaScript must be enabled to view this email address) or Brendan Kelly: .(JavaScript must be enabled to view this email address)
WJM Spin Out Company Expands Overseas
Wright, Johnston & Mackenzie LLP’s spin out family business consulting company, Family Business Solutions Ltd, has expanded into the Mediterranean through a collaboration agreement with Maltese management consultancy 2M Management Consultancy.
The new venture, called FBS2M, will launch at the Malta Family Business Conference at the end of January. FBS2M will provide locally based consulting and training services for enterprising families, family businesses and family offices.
Ken McCracken, a partner at WJM and the Managing Director of FBS, said, “In an economically tough world, we are excited to be able to report on this growth for FBS. It shows that the importance of a strong family business sector is beginning to be more widely recognised and we are delighted to be working in an international partnership with 2M.”
“Family businesses and business families all over the world share the same challenges like succession issues, governance and managing the business of the family. Working with 2M will enable us to provide innovative services for family businesses and family offices in Malta.”
Ken added, “Malta’s location at the centre of the Mediterranean and its important historic trading links makes the new venture ideally placed to use this opportunity to develop and expand further into other countries. Family enterprises make up the majority of the businesses in those countries and we look forward to working with 2M and local family businesses across the Mediterranean region.”
“Malta is also continuing to develop into an important regional financial centre. A business friendly government, with benign tax regimes for entrepreneurs and their businesses, is leading to a substantial amount of inward investment, much of which is family owned companies.”
Mario Duca, Managing Director of 2M, said, “We are delighted to be working with FBS. After identifying the need for new family business services in Malta, we reviewed the European market and FBS stood out as offering the most comprehensive range of consulting and training services. Also Scotland, as a country, has been innovative in the development of family business knowledge and practice and we intend to import as much Scottish experience and know-how as possible to Malta”.
Ken added, “Scotland has a long tradition of international trade and innovation. Scotland is at the forefront of family business knowledge, consulting and training and it is fitting that we should export our intellectual property in this area. We believe that by licensing our innovative knowledge and practice in the field of family businesses we can help strengthen the survival rates of family businesses, which can only be good for the wider economy.”
More information from Ken McCracken: .(JavaScript must be enabled to view this email address)
