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Employee benefits

Tuesday, 03 March 2015 - Take your pension to the max

Pensions have long been seen as a tax-efficient form of investment. The contributions that you pay into your pension will benefit from tax relief and aren't subject to tax while they're invested in your pension pot (although the tax credit paid with dividends can't be reclaimed by your pension scheme). Contributions to your employer's pension scheme (including any additional voluntary contributions you make) can be made from your gross pay before any tax is charged.
From 6 April 2015, there will be no restrictions on how much income you can withdraw from your defined contribution pension pot, but any income that is withdrawn (and it is possible to withdraw your whole remaining pension pot in one go) may be subject to income tax.

Tax-efficient commuting
If you are a commuter, check to see if your employer will give you a tax-free loan to buy your season ticket.

Business traveller
Use a pool car, if your employer provides these, for occasional business travel. Although the company car is still often an important part of an employee's remuneration package, tax and National Insurance costs could mean that your company car is not the most tax-efficient option for you.

The car benefit and car fuel benefit (where fuel for private use is provided with the car), on which you pay income tax, is calculated at up to 35% of the list price (car) and the same percentage on a notional £21,700 (fuel). The maximum taxable percentage is set to rise to 37% in April 2015.

Cash equivalents
If you are entitled to a company car, consider whether it would be more tax-efficient to take a cash equivalent in pay instead.

Lower emissions, lower taxes
If you are changing your company car, consider a low-emissions model. These are now taxed at a lower percentage of their list price than cars with a high CO2 rating. 

Childcare schemes and tax credits
If you are an employee and pay for childcare, consider asking your employer if they have a childcare scheme. Salary sacrifice childcare schemes are easy to establish and could result in substantial savings for both employees and employers.


Employee benefits