Navigating your course through a recession with Crowe
This is clearly important, because understanding where you are now - and the potential implications of an economic downturn over the next two or three years - is vital to creating a plan for survival.
But something just as important is your ‘people plan’.
How you fare through a recession, and more importantly how you come out of it, is in no small part due to the resilience, commitment and loyalty of your people.
The cost of living has been increasing since early 2021 and is now at its highest recorded level.
With employees feeling the squeeze on their finances, how can you help them without necessarily introducing an extra cost to your business? Here are some commonly overlooked tax-free benefits that can be provided to employees.
Free or subsidised workplace meals:
These can be provided tax-free, as long as they are available to all employees at the same location. This does not require the employer to have a canteen, and not all your people need to take up the offer, but this may be an effective way for employers to provide some direct support to their employees.
Tax-free car parking at or near the office:
Although not a realistic option for all employers, the cost can be met directly or reimbursed to employees via a voucher/ token etc.
Tax-free transport home:
If employees have to work later than usual, and this is not a regular occurrence, this can be provided if certain conditions are met.
Tax Breaks on support:
There are also tax breaks when employers provide welfare counselling, pension advice, small loans, training courses and trivial benefits (less than £50) without triggering any tax or NIC liabilities.
Salary sacrifice: Many employers take advantage of the reduction in national insurance when a salary sacrifice arrangement is put in place (often for pensions and electric vehicles). The national insurance savings can be shared with the employee to provide an effective increase in take-home pay. With pensions auto-enrolment, there is also nothing to stop the employer taking on the employee’s obligation to contribute to a pension, which further increases their take home pay.
Flexibility is key: Recruiting or retaining people could be affected by your attitude towards flexible working. To some this is a real lifesaver in terms of staying in employment. The ability to buy and sell holiday is another potentially cost-saving initiative that can make a difference to employees.
But the clue is in the word ’flexible’. How important is time keeping to you, versus results achieved? Where there are tangible outcomes required, such as reports prepared and delivered on time, how critical is it when the employee started and finished work on a particular day?
A flexible approach to all manner of issues, such as dentist appointments, school events, hospital appointments for elderly relatives – set against the perceived value among your people – can lead to happy employees who will go the extra mile to ensure their productivity and quality of work remains high.
So while the business facets of the Autumn Statement are likely to dominate your boardroom agenda, with Corporation Tax rates increasing to 25% in April 2023, and reduced R&D tax credits for SMEs - don’t forget that it’s your people that row your boat.
Your job is to steer – and encourage.
To start the conversation on how we can help your business, call Nick Latimer on 01242 234421, or email [email protected]