FOOL'S EYE VIEW
Seven Great Workplace Perks

By Alison Hunt (TMFAlly)
June 28, 2005

No matter who you work for, most companies will offer their staff some form of perk – which could range from a free burger to shares in the company. The trick is to find out what's on offer and decide whether it's a good deal for you.

So to help you out, here are some of the best deals commonly available:

1. Pension

OK, it may not seem very interesting but many employers provide a company pension and contribute to it too – this is free money that you should not turn down. For example: Say you earn £20,000 and your employer will contribute up to 5% of your salary to your pension. By not taking up the company pension you are effectively turning your nose up at a £1,000 a year.

Find out more in our Pension Centre.

2. Home Computing Initiative (HCI)

If you need a new home computer, but simply can't afford it, find out if your firm participates in the Home Computing Initiative (HCI).

HCI schemes were set up following the 1999 Finance Act to increase access to home computers. In real terms it means that you can effectively purchase a home PC or laptop (or certain peripherals) via your employer for less than half the price you'd pay on the High Street.

How does it work? Your employer bulk buys computers (usually at a significant discount) and leases them to its employees over a three-year period. The payments are deducted from your pay each month – but are taken from your gross salary. When you make the final payment, the computer is yours. Therefore, a basic rate tax payer saves 22%, plus a further 11% in National Insurance contributions; a higher rate tax payer saves even more!

The scheme is advantageous to your company too as not only will it save the amount of employer's National Insurance contributions it has to pay to the Inland Revenue, it can also claim the VAT back (provided it is registered). And though it is limited to PCs costing less than £2,500 and as a leasing deal you are tied in for three years, it does mean that a £1,000 PC could effectively be bought for as little as £500.

Find out more about the Home Computing Initiative at the DTI website.

3. Childcare Vouchers

If you have young children and your employer offers this perk it is probably worth snapping up!

Essentially, you 'sacrifice' some of your salary, in return for vouchers which can be used to pay for childcare. The first £50 of Childcare Vouchers each week can be bought free of income tax or National Insurance. There are significant savings to be made - a standard rate tax payer will save £816 per year by taking £50 of childcare vouchers per week – and a higher rate tax payer will save £1,066 per year! Not to be sniffed at!

What's more, as your employer doesn't have to pay National Insurance on the vouchers either, your company could save around £300 per year for each employee choosing Childcare Vouchers. And as both parents can purchase the vouchers (provided both work for companies offering the scheme), two higher rate tax payers could save £2,132 each year!

Find out more about Childcare Vouchers – and why not try this calculator to work out how much you could save.

4. Insurance

This too may seem boring - but if you have dependents this could save you a fortune. If your employer provides free life insurance, critical illness cover or income protection, it could save you pounds each month.

For example: A 35 year old, non-smoking male, can expect to pay around £20 per month for a £200,000 life cover policy (and a smoker could pay £25). By getting this cover through your employer for free, you're saving around £240 each year from life cover alone! And when you consider that critical illness and income protection cover are often more expensive, this could be over £500 worth of premiums each year that you don't have to pay. What's more, many companies will also provide cover to your spouse too – it may not be free, but it will often be cheaper than taking out separate policies yourselves.

Find out more in our Insurance Centre.

5. Sharesave

Also known as the Savings Related Share Option Scheme, this scheme allows you to buy shares in your company at a potentially reduced price.

Essentially, you're given the opportunity to 'save' between £5 and £250 each month for three, five or seven years; the money is taken automatically from your salary each month and placed in a savings account. The share price is fixed at the time that the scheme is set up – and most companies give an additional discount of up to 20%. At the end of the three-year period your savings pot will be given a tax-free bonus. At this point you can either:

(i) Use your pot to buy shares in your company at the fixed/frozen price
(ii) Continue to pay into the account for another two or four years
(iii) Take your money and the tax free bonus.

Therefore, if the share price has done well you can benefit by buying shares at the fixed and discounted price. However, if the share price has dropped significantly you can choose not to buy and either continue to contribute, or simply take your cash together with the tax free bonus. And though gains are taxable, as long as they fall below £8,500 you will be exempt from capital gains tax – and some simple tax planning could minimise any payment due.

American companies in the UK may operate an Employment Stock Purchase Plan (ESPP) which is a similar scheme to Sharesave, allowing you to buy shares at a fixed (and usually similarly discounted) price after just six months, rather than the three or more years. Although ESPP doesn't offer the tax-free bonus, it's usually worth joining as you can still potentially make money if the share price rises – with the advantage of only waiting for six months, rather than years. And if the share price doesn't rise you can simply take your cash.

Only a third of employees from companies operating Sharesave are actually participating, which is surprising considering that it's such an attractive scheme.

6. Share Incentive Plans (SIPs)

Although these tax advantaged plans were set up by the Government in 2000 to encourage employees to hold shares in the company in which they work, there is no official template for these schemes. One common method used is where employees are invited to purchase shares at full market value each month out of their pre-tax salary. Your company then pledges to match the shares you have bought on a one for one basis, up to a set maximum. You are then locked into the scheme for a certain length of time – often three years (or you'll lose the free shares) before you can sell the shares free of tax and National Insurance. And again, as long as gains are below £8,500 or depending on how long you hold your shares you will be exempt from any capital gains tax.

SIPs can be considered riskier than Sharesave as you're actually buying the shares each month, rather than saving to buy at a certain time. However, you're buying shares out of your gross salary and often getting two shares for the price of one so the share price would have to fall significantly for you to lose money – and you could potentially make a very good profit.

7. Private Medical Insurance (PMI)

If you are currently paying for Private Medical Insurance (PMI) you will know just how expensive it can be. However, if your employer offers this cover you could save yourself a fortune. Essentially, companies are able to take out special group deals with insurance companies, obtaining large discounts that private individuals would find hard to match.

And, as a free or taxable benefit you may be entitled to receive this cover for nothing, or simply have to pay the tax on it. And remember, if you and your spouse both wish to be covered, take out PMI for both partners through the lower rate taxpayer's company - and save even more money.

You can find out more about PMI in our Insurance Centre.

Of course, there are plenty more perks offered by employers: Gym membership, company cars and crθche facilities to name but a few. Check out what's available in your company – you may be able to take advantage of even more deals!

> Find a better deal for your pension and insurance policies via the Fool.