Can workplace benefits schemes save you money

Can workplace benefits schemes save you money by Tom Bunkham Workplace schemes and workplace benefits: are they worth it?Many companies offer a range of employee benefits and schemes to help you save money. But how can you know which ones are best for you?We spoke with the Money Advice Service to take a look at the benefits and tax advantages of workplace investment and saving schemes, and some other employee benefits you may be entitled to.PensionsA workplace pension is offered to employees as way to save towards their retirement. They are sometimes referred to as “occupational” or “work-based” schemes.  Over the next few years all employers will have to offer their employees access to a workplace pension. This government initiative is call auto enrolment.It is well worth being a member of your workplace scheme, as your employer could make a contribution into your pension scheme on your behalf. This will usually be a percentage of your salary.Your employer may also offer to match any personal contributions you make subject to a limit. Not only does your personal contribution attract tax relief at your highest marginal rate, but saving earlier and longer will give your pension more time to grow.Basic State Pension age   »Automatic pension enrolment: What you need to know   »Automatic pension enrolment: FAQ   »Savings and investmentsMany workplaces offer more than just a pension as part of your employee benefits package.  Some let you take advantage of workplace saving and investment schemes, of which there are three main types:Save As You Earn (SAYE)Share Incentive Plans (SIPs)Workplace ISAs (NISAs)For more information on workplace investment schemes, visit https://www.moneyadviceservice.org.uk/en/articles/workplace-investment-schemesThe point of these schemes is to encourage you to save they shouldn’t be seen as a replacement for saving into a pension but they do enable you to make the most of any tax breaks you might be entitled to.SAYESharesave, also known as Save As You Earn (SAYE) , allows employees to buy company shares with their savings at a fixed price. SAYE schemes typically run for three or five years, during which time you may pay up to £500 into the scheme. When the scheme reaches maturity the interest and any bonus is tax-free and is then added to your savings.You can either take this and the total of your savings as cash or use it to buy further shares at the fixed price. You could be subject to capital gains tax if you decide to sell them, but not if you put them into a pension or an ISA (NISA) as soon as you purchase the shares.SIPsSIPs are another tax-efficient way to get shares in the company you work for. You don’t pay tax or National Insurance contributions on the money used to purchase the shares, provided you keep them in the plan for five years. You also won’t be subject to Capital Gains Tax if you keep them in the plan until you sell them, but may be subject to Income Tax and National Insurance if you take them out of the plan early.T here are four ways to get the shares:They could be gifted to you from the firm, up to a maximum of £3,600 in any tax yearYou could buy Partnership shares straight from your pay before any tax deductions, subject to a maximum of £1,800 or 10% of your salary (whichever is lower)Your employer could provide you with a maximum of two matching shares for every Partnership share you buyYou could buy more shares with the dividends you receive if the scheme allows it, but you will have to keep the shares at least three years otherwise you may be required to pay income taxNISAsWorkplace ISAs (NISAs) offer a way to make tax-efficient investments by paying into a stocks and shares ISA directly from your salary.The workplace NISA is still subject to the usual allowance limits and you will still only be able to invest in one stocks and shares NISA in each tax year. However, you will usually benefit from discounted fees and charges, though there is less choice of what you may be able to invest i n and you won’t be able to switch between different stocks and share options as you would if you had invested privately. Employers can offer payroll deduction however there are no tax benefits to the employee with regard to any contributions.Salary sacrificeA salary sacrifice is when an employee gives up the right to part of their salary due under a contract of employment in return for some form of non-cash benefit, such as gym membership or commuting travelcards. The impact of any Tax and National Insurance Contributions payable by the employee will depend on your salary and any non-cash benefits you receive.Of course by effectively receiving less income, you will pay less tax and National Insurance contributions. Common non-cash benefits received under a salary sacrifice arrangement include childcare vouchers, additional pension contributions and income protection policies.Receiving less cash as your salary could have an impact on any mortgage applications you make, and may affe ct your State Pension as well as other contribution-based state benefits, such as Jobseeker’s Allowance.Also, you’re probably better off without salary sacrifice if you receive tax credits to help with childcare costs. This is because tax credits are only available if you pay for childcare with your own money rather than vouchers.For more information on salary sacrifice schemes, visit https://www.moneyadviceservice.org.uk/en/articles/salary-sacrifice-schemesOther workplace benefitsThere are many other workplace benefits an employer could offer you free eye tests, private health and dental care packages and a company car may form part of your employee package â€" as well as many other benefits. Your employer should provide a breakdown of the benefits they offer as part of your package upon employment.