22 March 2012
What the Spring Budget means for your employee benefits and your business’ tax efficiency
Even Chancellor of the Exchequer Jeremy Hunt agrees, saying in his address that, “We should give employees support before they end up leaving their job.”
Yet the ‘support’ remains to be seen; the government’s allocation of £400m to the support of musculoskeletal health and mental health support is not the figure many hoped it would be.
To speak frankly, the health sector is still coping with the ramifications of a worldwide pandemic on the UK population’s physical and mental health. The NHS just does not have the resources to cope with getting sick employees back to work within a timeframe that wouldn’t be fiscally punitive to your business – you only need to look at the wait times for check-ups and treatment, which can even extend to over a year, to see that this is just not a tenable position.
Yet the Spring Budget announcement permits this troubling trend of excessive wait times for treatment and check-ups to continue, with no support announced to provide people with quicker access to GP appointments.
It’s clear from the action the government has taken that they see the value of employer-implemented support in helping employees with their physical and mental complaints, and it’s easy to see why; in the current climate, with the NHS showing no signs of getting better soon, it’s clear that we need to find ways around our national health service.
If you’d like to know more about how your employee benefits offering can help your business to attract, retain and rehabilitate your employees, please contact your Towergate Employee Benefits consultant.
Make sure your cover’s paying attention to the rise in Corporation Tax
You might know relevant life insurance by its more colloquial name, ‘life cover on expenses.’ This is an allowable business expense for Corporation Tax purposes and doesn’t attract Income Tax or National Insurance; this is why many high net-worth individuals pay for their life cover through the business. Now that the Spring Budget has announced that Corporation Tax is rising to 25% for medium-sized businesses and above, this makes relevant life cover look even more appealing. You could see as much as a 53% difference in net cost between an ordinary life policy and relevant life cover.*
If you’d like to get expert advice on how to maximise your business’s tax efficiency, please get in touch with your Towergate Employee Benefits consultant.
Don’t amend your group life cover just yet
If you’re in a specialised scheme to ensure you don’t breach the lifetime allowance (LTA) rules, you may be particularly pleased that the government announced the abolition of the LTA in the Spring Budget.
But don’t amend your cover just yet. The new legislation change doesn’t take effect until April 2024, meaning that if there’s a change of government in the meantime, the abolition plan could be reneged.
There’s also the risk of a less skilled advisor ignoring, or being oblivious to, the impact of transitional protections for previously held benefits.
If you’re concerned about how this change might impact your cover, or you have any questions, please do not hesitate to get in contact with your Towergate Employee Benefits consultant.
Scrapping the LTA probably won’t solve businesses’ labour shortage woes
Businesses around the country are struggling with a shortage of employees, and the government thinks scrapping the lifetime allowance (LTA) will prompt early retirees back into work. But the current LTA only impacts the wealthiest in our society, so its abolition – if it does take place – will likely have a minimal impact on the workforce shortage except in some highly niche sectors.
It makes much more sense to divert energy into getting employees who are out of work because of illness healthy again so they can get back to work.
Be aware of other Budget announcements that could impact your business
Our sister company, Towergate Insurance, has provided analysis on some of the other aspects of the Budget, including:
- Super deduction tax relief
- R&D tax credits
- Investment zones
- Artificial intelligence
- Fuel duty
- Childcare costs
- Additional help for workers
- Energy price cap
You can read their report here.
*Based on our understanding of current law and HM Revenue and Customs practice for the tax year 2023/24