Employee benefits & policies in the United Kingdom

With so many employee benefits options in the United Kingdom, how do you choose the right benefits for your team?

Ben character at his computer

Employee benefits & policies in the United Kingdom

We’ve done the heavy lifting for you and created a handy guide to employee benefits in the United Kingdom.

To help you choose the perfect package for your team, we’ve outlined what counts as a:

  • statutory requirement
  • standard benefit
  • great benefit
Question mark
Benefits policies - company policies that involve employee benefits e.g., holidays, flexible working, maternity/paternity, etc.
πŸ“
Statutory
β˜‘οΈ
Market Standard
🌟
Great

Holidays

πŸ“
Statutory

Not applicable

20 days + 8 bank holidays (28 total)

πŸ‘
Competitive

25 days + 8 bank holidays (33 total)

πŸ‘
Above & Beyond

28 days + 8 bank holidays (36 total)

Buy/Sell Holiday

Flexible Working

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

1 Day/Week

πŸ‘
Above & Beyond

2+ Days/Week

Work From Anywhere For 2 Weeks Per Annum

Sick Leave

πŸ“
Statutory

Not applicable

Statutory Sick Pay (Β£96.35) for 28 weeks

πŸ‘
Competitive

10 days full pay per year + Statutory Sick Pay

πŸ‘
Above & Beyond

30 days full pay per year + Statutory Sick Pay

Paternity Pay

πŸ“
Statutory

Not applicable

Β£151.97 or 90% of employee's average weekly earnings for 2 weeks

πŸ‘
Competitive

2 weeks full pay

πŸ‘
Above & Beyond

4 weeks+ full pay

Maternity Pay

πŸ“
Statutory

Not applicable

90% of your average weekly earnings (before tax) for the first 6 weeks

Β£151.97 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks

πŸ‘
Competitive

12 weeks full pay including Statutory

πŸ‘
Above & Beyond

6 months+ full pay including Statutory

Other

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Referrals Schemes

Volunteering Days

πŸ‘
Above & Beyond

Mental Health Leave

Personal Development Leave

Sabbaticals

Question mark
Core benefits - Β traditional employer-paid benefits products e.g., insurances (health/life) and pension with core coverage
πŸ“
Statutory
β˜‘οΈ
Market Standard
🌟
Great

Medical

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Private Medical Insurance: No pre-existing conditions (Moratorium)

No dependants

Health Cash Plan: Level 1 Coverage

πŸ‘
Above & Beyond

Private Medical Insurance: Pre-existing conditions covered(Medical History Disregarded)

Dependants Covered

Vision, Optical, Dental

Health Cash Plan: Level 4+ Coverage

Other Health

πŸ“
Statutory

Not applicable

Display Screen Equipment (DSE) Asessment

πŸ‘
Competitive

Employee Assistance Programme Eyecare Vouchers

πŸ‘
Above & Beyond

On Demand therapy and/or mental health services

Eye-care Vouchers

Health Assessment

Pension

πŸ“
Statutory

Not applicable

Employer Contribution: 3%

Employee Contribution: 5%

πŸ‘
Competitive

Match employee contribution up to 5% employer contribution

πŸ‘
Above & Beyond

Match employee contribution up to 10% employer contribution

Life Insurance

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

1x-4x Annual Salary

πŸ‘
Above & Beyond

4x - 10x Annual Salary

Critical Illness

πŸ“
Statutory

Not applicable

πŸ‘
Competitive
πŸ‘
Above & Beyond

Income Protection

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

75% of income for 60 months

πŸ‘
Above & Beyond

75% of income until Retirement

Question mark
Supplemental benefits - contemporary benefits to give your benefits package an edge e.g., flex allowances & salary sacrifice options
πŸ“
Statutory
β˜‘οΈ
Market Standard
🌟
Great

Wellbeing

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Subsidised Gym Membership

Β£30 - Β£50 / month Wellbeing Budget

πŸ‘
Above & Beyond

Fully Paid Gym Membership

Access to mediation & wellbeing apps

Β£50 - Β£250 / month wellbeing budget

Learning & Development

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Β£300 - Β£1,000 per person per year

πŸ‘
Above & Beyond

Β£1,000 - Β£3000+ per person per year

Working From Home

πŸ“
Statutory

Not applicable

Ergonomic Consultation (DSE Assessment)

πŸ‘
Competitive

Home office budget of Β£500 - Β£1,000

πŸ‘
Above & Beyond

Home office budget of Β£1,000+

Salary Sacrifice & Other

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Cycle to Work

Season Ticket Loans

Employee Discounts

Charitable Giving

πŸ‘
Above & Beyond

Cycle to Work

Season Ticket Loans

Employee Discounts

Charitable Giving

Late Night Taxis

Electric Car Leasing

Workplace Nursery

Debt Consolidation & Earned Wage Access

Financial Advice

Employee Stock Options Scheme

Food & Drink

πŸ“
Statutory

Not applicable

πŸ‘
Competitive

Weekly Lunch

Monthly Socials / Happy Hours

Late night meals

In Office Snacks

πŸ‘
Above & Beyond

Daily Lunch

Weekly Socials / Happy Hours

Late Night Meals

In Office Snacks

Β£50 - Β£100 / month meal budget

What are the tax implications of employee benefits & policies in the United Kingdom

Tax is a tricky one - especially with a global team to manage. Our tax guide simplifies the tax implications of various employee benefits in the United Kingdom for you.

We’ve narrowed down how employee benefits affect:

  • Tax reporting
  • Employer tax
  • Employee tax
Question mark
Benefits policies - company policies that involve employee benefits e.g., holidays, flexible working, maternity/paternity, etc.
πŸ“
Tax Reporting
πŸ‘©β€πŸ’Ό
Employer Tax
πŸ‘«
‍Employee Tax

Holidays

πŸ“
Statutory

Not applicable

Taxed as Income

πŸ‘©β€πŸ’Ό
Employer Tax

Employer National Insurance

πŸ‘«
Employee Tax

Income Tax (PAYE)

Employee National Insurance

Sick Leave

πŸ“
Statutory

Not applicable

Taxed as Income

Employers can claim SSP (Statutory Sick Pay) from HMRC

πŸ‘©β€πŸ’Ό
Employer Tax

Employer National Insurance

πŸ‘«
Employee Tax

Income Tax (PAYE)

Employee National Insurance

Paternity Pay

πŸ“
Statutory

Not applicable

Taxed as Income

Employers can claim SPP(Statutory Paternity Pay) from HMRC

πŸ‘©β€πŸ’Ό
Employer Tax

Employer National Insurance

πŸ‘«
Employee Tax

Income Tax (PAYE)

Employee National Insurance

Maternity Pay

πŸ“
Statutory

Not applicable

Taxed as Income

Employers can claim SMP (Statutory Maternity Pay) from HMRC

πŸ‘©β€πŸ’Ό
Employer Tax

Employer National Insurance

πŸ‘«
Employee Tax

Income Tax (PAYE)

Employee National Insurance

Question mark
Core benefits - Β traditional employer-paid benefits products e.g., insurances (health/life) and pension with core coverage
πŸ“
Tax Reporting
πŸ‘©β€πŸ’Ό
Employer Tax
πŸ‘«
Employee Tax

Medical

πŸ“
Statutory

Payroll or P11D

A Ltd company or LLP can treat health cover as tax deductible. However, premiums paid to insure the health costs of employees and directors is treated as a taxable benefit.

πŸ‘©β€πŸ’Ό
Employer Tax

Class 1A NIC on benefits provided must be paid and P11D(b) submitted.

Employers benefit from Corporation Tax savings on medical insurance cost

πŸ‘«
Employee Tax

Payrolled benefits will be taxed depending on which tax bracket you are in.

Life Insurance

πŸ“
Statutory

No BIK

πŸ‘©β€πŸ’Ό
Employer Tax

Corp tax deductions

πŸ‘«
Employee Tax

No Tax due on payout

Critical Illness

πŸ“
Statutory

The premiums are a benefit in kind, however the payout is not taxable.

πŸ‘©β€πŸ’Ό
Employer Tax

Corp tax deductions

πŸ‘«
Employee Tax

Payrolled benefits will be taxed depending on which tax bracket you are in.

No Tax due on payout

Income Protection

πŸ“
Statutory

The premiums are a Tax free benefit to the employee, the premiums are tax deductible for the employer and the payout is taxed via PAYE for the employee.

πŸ‘©β€πŸ’Ό
Employer Tax

Corp tax deductions

πŸ‘«
Employee Tax

PAYE due if paid out The payments, usually monthly, will typically be taxed via PAYE. Scheme benefits are therefore subject to both tax and national insurance. This includes employer’s national insurance.

Question mark
Supplemental benefits - contemporary benefits to give your benefits package an edge e.g., flex allowances & salary sacrifice options
πŸ“
Tax Reporting
πŸ‘©β€πŸ’Ό
Employer Tax
πŸ‘«
Employee Tax

Learning & Development

πŸ“
Statutory

Normal business expense as long as the L&D is going to improve the employees work

πŸ‘©β€πŸ’Ό
Employer Tax

Corporate tax relief

πŸ‘«
Employee Tax

tax free

Working From Home

πŸ“
Statutory

Β£6/week for weekly paid employees (Β£4/week prior to 6 April 2020); or

Β£26/month for monthly paid employees (Β£18/month prior to 6 April 2020).

πŸ‘©β€πŸ’Ό
Employer Tax

Corp tax relief

πŸ‘«
Employee Tax

tax free

Food & Drink

πŸ“
Statutory

You don’t have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance if you offer all your employees:

free or subsidised meals of a reasonable value at a workplace canteen. OR

vouchers that cover the cost of buying these meals

πŸ‘©β€πŸ’Ό
Employer Tax

Corp tax relief

πŸ‘«
Employee Tax

tax free

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