Clive’s Corner: Our resident expert talks savings on tech
How can Salary Sacrifice be used to make savings on tablets, computers and smart TVs?
Whilst there are many organisations now running salary sacrifice benefits in the UK, it is always worth reminding ourselves exactly what the words mean. A salary sacrifice is an agreement between the employer and the employee to reduce the cash remuneration that is paid to the employee in exchange for the use of a non-cash benefit provided by the employer.
The provision of IT equipment can fit right into a benefits strategy through that arrangement. And the use of tablets, PCs, even Smart TVs, can also improve an employee’s awareness of and ability to manage IT changes in the workplace. Where the aim was once to join the digital revolution, the aim now is to keep up with developments! You can help your staff do that through a technology benefits programme.
According to the way you structure the salary sacrifice terms, your staff can enjoy tax advantages by opting to take IT equipment as a benefit. The legislation makes clear that, if an employer provides an employee with an ‘asset’ (as opposed to a ‘service’) such as IT equipment, a fixed proportion of the original cost is liable to income tax on an annual basis. We have a number of programme plans, over 1, 2 or 3 years, that can help you understand how this can be rolled out in practise to benefit everyone. We do not apply a one-size fits all approach; rather we work with you to ensure the best fit is made between your organisation and the available options.
For example, an increasingly popular choice is our 2 year ‘refresh or keep’ programme.
So how does that work?
Staff are offered a wide range of IT products via a 2 year salary sacrifice arrangement. At the time they are advised that at the end of the benefit period they will have a choice to return or keep the equipment. If they return it they can then enjoy a double-digit discount on their next choice, and by double digit we mean at least 15%, and up to 25%, depending on the product.
Why would anyone choose to do this?
Simply put, to make significant savings and keep up to date. We know a lot of people now look to refresh their tablets and laptops on a regular basis – the developments in technology almost demand this for entry level and mid-priced items! Through the salary sacrifice, they can enjoy the original products for the 2 years at a reduced cost by saving in tax and NI, and then by returning the products they can then access brand new products at way below retail prices; and then make tax savings on the use of those new products. We can provide the price discounts by recycling the old products and passing the savings on to them.
For those that wish to keep the products they have used over 2 years, once the salary sacrifice has closed there is nothing more to pay, but any income tax not paid on the value will need to be accounted for on their next P11D (or via payroll accounting). They will still enjoy NI savings through the salary sacrifice arrangement as well as our keen pricing and customer support.
Furthermore the website we built, for your staff to access and take part in the benefit, shows all the options and savings at a click.