Chris Thomas tells HRNews about providing employee benefits in a more tax efficient way to help employees’ finances
There is a cost of living crisis and it’s hitting employees hard, so what can employers do to help? The situation has been made worse by tax changes made in the recent Autumn Statement so are there opportunities for employers to be creative and help minimise the impact? We’ll consider that.
A reminder. In the Autumn Statement on 17 November 2022, the Chancellor of the Exchequer, Jeremy Hunt announced:-
- A change to the top rate of income tax affecting those on higher incomes. So, apart from in Scotland, the 45% ‘additional rate’ will be paid on earnings over 125,140, instead of 150,000.
- Income tax, National Insurance and Inheritance Tax thresholds will be frozen for further two years, until April 2028
- Personal allowances for income tax and higher rate thresholds will be frozen for further two years, until April 2028
On top of that we have spiralling inflation so it is, effectively, a ‘double squeeze’. Inflation is leading to higher prices which in turn is leading to higher wage demands which are unaffordable for most businesses. Even if they are affordable, those employers do not want to be burdened with permanent wage hikes given that inflation is expected to come down for the next year or two as the government gets control of it again.
So, is there anything employers do anything to counteract this double squeeze without increasing wages? One...
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