To say 2010/11 will be a tight year financially is putting it mildly for some, possibly most, practices.
Apart from practices whose contracts with their staff commit them to match the Agenda for Change pay rise of 2.25 per cent for this year, many GP employers will be forced into making the difficult decision to give their staff little or no salary increase.
This may lead to a lowering of staff morale together with reduced efficiency. It may also prompt some team members to seek alternative employment, and they may be the employees you least want to lose.
If adding significantly to the annual staff overheads bill is out of the question, providing perks that staff will value may go a long way to sweeten the pill.
Do bear in mind though that as well as any extra cost to the practice as employer, some perks, depending on what they are, can affect individual employees' tax position.
So as well as finding out from the team about the perks they would like, check the expenses and benefits A to Z in the section for employers on HM Revenue & Customs website (www.hmrc.gov.uk). Or ask the practice's accountants.
Set up a gym
If there is surplus space at the surgery, you could set up a gym for employees. Providing the facility is open to all employees and to members of their family, this will not count as a taxable benefit in kind.
However, if you provide membership to an external gym, or the practice gym is open to members of the public, this will be a taxable benefit. Employees will have to pay tax and national insurance (NI) on the benefit. The practice will be liable also to pay more in employer's NI.
Additional holiday leave
Giving staff an extra couple of days' holiday will probably cost the practice only a small amount (if temporary staff cover is needed) or perhaps nothing at all, but it will certainly be appreciated.
Consider also allowing staff to buy or sell holidays: if employees want an extra day off, let them 'buy' them by way of a deduction from their salary. Alternatively, if individuals have holiday left at the end of the holiday year, pay them for the days not taken.
However, do make sure that you comply with employment law requirements on paid leave - check on the Department for Employment and Learning site (www.delni.gov.uk).
Long service awards
Practices can pay employees with 20 years' service or more, a long service tax-free award of up to £20 per year. This must go through the payroll and must not paid in cash or vouchers.
Childcare vouchers can be an attractive option. The practice can provide childcare vouchers of up to £243 a month to employees. They are tax and national insurance-free. The following conditions have to be met:
- The scheme must be open to all employees.
- The child for whom the vouchers are provided must be the employee's child or a child for whom the employee has parental responsibility.
- The childcare must be reg-istered or approved.
Employees receiving childcare vouchers need be aware that they may reduce childcare tax credits.
The A to Z of expenses and benefits on www.hmrc.gov.uk has a calculator for checking if tax credits will reduce.
Providing a mobile phone to an employee and paying for calls is not a taxable benefit, but bear in mind that this may prove costly to the practice. Providing more than one phone will mean extra tax for the employee.
Practices can organise social functions for employees costing up to £150 per head a year. This maximum includes the Christmas party.
An employer can provide an interest-free loan of up to £5,000 a year without the employee paying tax on this.
Be cautious with this as problems can arise if the employee leaves before paying off the loan.
Bonuses can be a useful tool in motivating staff, but they are subject to tax and NI deductions as with normal pay. However, be careful not to create the expectation that staff will get a bonus every year.
While most practice staff will be in the NHS Pension Scheme, it is possible for an employer to make contributions to approved pension schemes (such as a personal pension) tax-free.
This can be attractive to older employees who might be willing to make a salary sacrifice in return for pension contributions on their behalf and the practice will save on employer's NI.
- Simon Pointon is an accounts manager at Cheshire specialist medical accountants Sandison Easson & Co, www.sandisoneasson.co.uk