By Daniel Pollard - 2 November 2020
UK employers consulted with staff on nearly half a million redundancies during the pandemic - roughly 1.5% of the working population. The true number will have been much higher as small-scale redundancies are not captured by government statistics. The furlough scheme will have given many employers an opportunity to pause but as the scheme comes to an end, employers face some tough choices.
Over recent months we have seen a huge amount of creativity from our clients in finding ways to minimise redundancies. Over the next couple of weeks we will share 12 possible strategies adopted by our clients and some thoughts of our own to help reduce cost without compulsory lay-offs.
11. Pay Less Tax - a company Tesla anyone?
Wow that got your attention!
The notion of a company car was popularised during the 1960s, 70s and 80s a result of the relatively favourable tax treatment of non-cash benefits (perks). In recent years, the Government has penalised drivers of all but the most efficient company cars. As a result, company cars have rather gone out of fashion with most employees who would once have been eligible and are instead opting to take cash.
That has all changed. For the 2020-21 tax year there are no “benefit in kind” tax changes for employees provided with a fully electric company car.
The tax charge will increase to 1% of the new list price from 2021-22 and 2% of the list price for 2022-23. That means an additional rate taxpayer will face an annual tax bill of just £324 and £648 for each of the next two years to drive a £72,000 Tesla S. That might cost an employer £640 a month to provide a benefit that would require an employee to earn £1500 a month to pay for. The same logic applies to far less vehicles.
If that sounds a little too flash then more mundane suggestions include:
For all 12 ways to reduce HR costs without redundancies click here.