Flexible Benefits FAQ
1. What are flexible benefits?
Flexible benefits are voluntary benefits that you can select in addition to your standard benefits (annual leave etc). Some of these benefits offer tax and NI savings, some offer benefits at preferential and discounted rates and most offer the opportunity to spread the cost of benefits over 12 months and extend the advantages of these benefits to dependents.
2. Why is the University offering Flexible Benefits?
Flexible Benefits offer you a choice of benefits and also helps the University to recruit and retain staff and support diversity.
3. Who can join the scheme?
The scheme is open to all University staff employed on substantive appointments (i.e. not on variable hours appointments). There are some restrictions on this type of scheme and Her Majestys Revenue and Customs (HMRC) rules may affect the choices individuals have within the scheme:
Pay cannot be reduced below the Lower Earnings Limit for NI purposes or Minimum Wage.
4. What is the status of benefits with regard to tax and national insurance?
There are three different ways that benefits can be treated for tax and National Insurance purposes. The status depends on government guidance and initiatives.
Salary Sacrifice Tax and NI savings Government approved schemes which allow deductions from gross pay and savings on both tax and NI.
Salary Sacrifice NI savings benefit deductions are taken from gross pay. NI is saved, however, it is a taxable benefit so will be treated as a benefit in kind for tax purposes.
No Tax or NI savings Benefits which are treated as cash by the HMRC, such as retail vouchers. These offer discounts but not tax or NI savings.
5. How does salary sacrifice work?
A salary sacrifice happens when you give up the right to receive part of your cash pay due under your contract of employment. In this scheme the University will in return provide you with a non-cash benefit such as a bicycle.
Income tax and national insurance are paid on the amount of pay after is the cost of these benefits are taken into account. This is a lower amount and therefore less tax and NI is paid.
6. How will the scheme be administered?
HR will continue to administer the scheme in-house and provide a helpdesk facility (01524 510614).
7. How do I select the benefits?
When enrolment opens you will be able to go on line via employee self-service and model your benefits. Enrolment will close on 12 September. You must remember to click the "submit" button to confirm your selections.
8. What restrictions are there with regard to salary sacrifice?
Where benefits are selected through salary sacrifice you cannot reduce your pay below the Lowers Earnings Limit for NI purposes or National Minimum Wage. This is to protect you from losing access to important state benefits such as pension, sick pay or maternity pay.
9. What restrictions are there with regard to changing my mind about the benefits I choose?
Normally you can only amend your choices once a year unless you have a Life Event. A Life Event means:
Birth or adoption of a child
Gaining a partner
Death of dependant
Contractual change in working hours
Change in earnings outside of annual pay review
10. When are benefits effective?
All benefits selections are effective from 1 October 2012.
11. Why have I been asked to update my address details in employee self-service?
Correspondence about flexible benefits will be sent to your home address. Benefit providers will also correspond with you via your home address and certain benefits eg retail vouchers or car parking permits will be sent to this address.
12. Why does the government allow people to take advantage of these tax and NI savings?
HMRC permits salary sacrifice schemes that are linked to government social policy; for example tax and NI relief is available on child care vouchers to encourage more parents to work and therefore generate more income for the economy as a whole.
12. What benefits will be available?
Details of the benefits on offer can be found here