POLICY FOR THE APPLICATION OF TAX EFFICIENT SAVINGS SCHEMES FOR PORTSMOUTH HOSPITALS TRUST STAFF

Version / 8
Name of responsible (ratifying) committee / HR Policy Group
Date ratified / 22 January 2015
Document Manager (job title) / HR Manager
Date issued / 30 January 2015
Review date / 22 January 2017
Electronic location / Corporate Policies
Related Procedural Documents / Expenses Policy, Induction Policy
Key Words (to aid with searching) / Cycle to Work Scheme; On-Site or Park and Ride Parking Charges; On-Site Nursery Childcare Costs; Childcare Vouchers; Employee Benefits; Tax Allowances; Wage and Salary Administration; Supplementary Earnings; Employee Benefits; Child Care;; Personnel Procedures
Version / Date Ratified / Brief Summary of Changes / Author
8 / 22.01.15 / General review and update / HR Manager

CONTENTS

QUICK REFERENCE GUIDE

1.INTRODUCTION

2.PURPOSE

3.SCOPE

4.DEFINITIONS

5.DUTIES AND RESPONSIBILITIES

5.1.Managers

5.2.Individual Employees

5.3.Employee Benefits Advisor

6.PROCESS

7.TRAINING REQUIREMENTS

8.REFERENCES AND ASSOCIATED DOCUMENTATION

9.MONITORING COMPLIANCE WITH, AND THE EFFECTIVENESS OF, PROCEDURAL DOCUMENTS

QUICK REFERENCE GUIDE

This policy is to provide management instructions and guidance relating to the application of Tax Efficient Savings Schemes at Portsmouth Hospitals NHS Trust.

For quick reference the guide below is a summary of actions required. This does not negate the need for the document author and others involved in the process to be aware of and follow the detail of this policy.

  1. A Tax Efficient Savings Scheme is an arrangement between the Trust and an employee, whereby the employee agrees to forego part of their future entitlement to salary in return for the Trust providing them with benefits of a similar value. Depending on the nature of the non-cash benefit, these arrangements can be beneficial to both the Trust and the employee through income tax and national insurance contributions savings.
  1. All employees have the opportunity to participate in one or more of the following Tax Efficient Savings Schemes:
  • Cycle to Work Scheme including the purchase of safety equipment
  • On-site or Park and Ride Parking Charges
  • On-site Nursery childcare costs
  • Childcare vouchers
  • Oasis Wellness Centre Membership
  1. Entering a Tax Efficient Savings Scheme constitutes a change in the terms and conditions of employment with the Trust. Each employee must determine whether participation in the Scheme will be beneficial in his/her individual circumstances. If uncertain, individuals should seek independent financial advice.
  1. If an employee wishes to participate in one of the offered schemes, they should contact:
  • Cycle to Work Scheme –
  • On-site or Park and Ride Parking Charges –
  • On-site Nursery childcare costs – Tops Nursery
  • Childcare Vouchers –
  • Oasis membership –

1.INTRODUCTION

1.1The introduction of Tax Efficient Savings Schemes is consistent with Portsmouth Hospitals Trust’s (“the Trust”) objective to offer employment conditions which will attract and retain employees of outstanding quality.

1.2A Tax Efficient Savings Scheme is an arrangement between the Trust and an employee: the employee agrees to forego a proportion of their salary in exchange for a non-cash benefit. This benefit could be to help with childcare or be used to cover the cost of a bicycle. It follows that if the employee opts to receive less salary, they will earn less too. This means that, as the sum they sacrifice is subtracted from pre-taxed income, they do not pay tax or national insurance contributions on the value of the benefit.

2.PURPOSE

2.1The purpose of this policy is to provide clear information on the options available to employees under the Trust’s Tax Efficient Savings Schemes, and details of the application process for each one.

3.SCOPE

3.1The Trust is taking advantage of Government initiatives to provide all employees with the opportunity of participating in one or more of the following Tax Efficient Savings Schemes:

  • Cycle to Work Scheme – this provides a monthly contract hire arrangement on a range of bicycles up to an agreed limit, with typical savings of between 30 to 50%; however the actual amount of saving will depend on the individual employee’s personal tax band. Although the bicycle can be used at any time, a bicycle purchased through the Cycle to Work Scheme should be used for work journeys at least 50% of the time. . This scheme can also be used to purchase safety equipment only (minimum spend £100) or safety equipment with a bicycle purchase. Employees may not claim expenses for business trips made using a Cycle Scheme bicycle (see Expenses Policy).
  • On-Site or Park and Ride Parking Charges – this offers discounted monthly rates for staff wishing to park on site or at a Park and Ride venue. For example a basic rate tax payer paying £10 per month on car parking can expect to save £3.24 and national insurance, reducing the net cost to £6.76 per month.
  • On-site Nursery childcare costs can be paid from salary before tax and national insurance (NI) contributions are deducted.
  • Childcare Vouchers – these can be provided in connection with all or part of the costs of registered childcare, free of tax and NI.
  • Oasis Wellness Centre Membership - can be paid from salary before tax and national insurance (NI) contributions are deducted.By opting for this option you will authorise your gross salary to be reduced by the sum of £25.49 per month (approximately£17.75 per month net), in return for which you will receive membership to Oasis Wellness Centre, subject to current Terms and Conditions. Your salary deduction will be made under the provisions of the Tax Efficient Savings Scheme

3.2Employees who decide to participate in any of the above schemes will be asked to sign a written amendment to their employment contract to confirm they have understood the changes to their gross salary. This will then result in a reduction of the salary by the equivalent cost of the benefit(s) of choice, which will be paid by the Trust either:

  • By direct financial transfer to the Cycle Scheme hosts;
  • In the case of the QAH on-site nursery and on-site or park and ride parking charges, by direct financial transfer to the relevant account;
  • In the case of independent nurseries or registered child minders, by means of vouchers issued by The Trust’s appointed provider or another of the approved commercial agencies set up for this purpose. (Before submitting an application for this particular Scheme, employees should check with their child care provider whether such vouchers will be accepted by them.)

3.3Childcare benefit tax and NI exemption does not apply to:

  • School fees;
  • Cash given directly to an employee to enable them to meet the costs of their own childcare arrangements;
  • Payment by the employer of an employee’s own childcare bills.

3.4In the event of an infection outbreak, flu pandemic or major incident, the Trust recognises that it may not be possible to adhere to all aspects of this document. In such circumstances, staff should take advice from their manager and all possible action must be taken to maintain ongoing patient and staff safety.

4.DEFINITIONS

4.1Tax Efficient Savings Scheme is an arrangement between an employer and an employee where the employee agrees to receive part of gross salary as a benefit rather than as salary. The advantage of the scheme is that the value of the benefit can be provided by the employer free of tax and NI contributions on that portion of salary. This presents a saving to the employee.

5.DUTIES AND RESPONSIBILITIES

5.1.Managers

5.1.1Managers will ensure that new members of staff attend the Trust’s Corporate Induction Programme, in order to ensure they are made aware of the existence of this policy and the schemes contained within it (see Trust Induction Policy).

5.1.2Managers will ensure that existing members of staff are made aware of the content of this policy.

5.2.Individual Employees

5.2. Should an employee wish to participate in one of the schemes outlined in this policy, they will contact the nominated individuals at Section 4 of the quick reference guide.

6.PROCESS

6.1The Trust will not unreasonably withhold the Tax Efficient Savings Scheme from any employee unless the Trust would be justified in withholding such consent in circumstances where:

  • The arrangement would result in substantial additional costs to the Trust;
  • Where the proposed tax efficient saving is greater than the salary;
  • Where the sacrificed amount reduces a salary to below the minimum wage.

6.2Participation in a tax efficient savings agreement will commence from the first full pay period after the employee’s signed application to join a Scheme has been approved. Each agreement will detail:

  • The reduction in salary the employee has agreed to;
  • The value of goods or vouchers they will receive; and
  • The minimum duration of the salary sacrifice agreement.

6.3In general, the minimum duration of the tax efficient savings agreement for the cycle hire contract is 12 months and for on-site nursery and child care vouchers is 12 months from the effective date of entry, renewable thereafter. There will be no administrative charge applied.

6.4No rights can be exercised in relation to the sacrificed portion of salary, and the agreement cannot be revoked or changed in any way within the agreed period, i.e. the lower cash salary will continue to be paid for the duration of the agreement, even if the non-cash benefit is not longer required (e.g. the child is withdrawn from the nursery). The Tax Efficient Savings Scheme will terminate early only if the salary itself is ended, e.g. by the employee resigning their position.

6.5Should an employee wish to revert back to their usual salary or increase the value of goods or vouchers received during this time, they may not have an automatic right to do so. This will depend on the clauses in each agreement. Each agreement may, however, include a clause relating to an earlier review in case of a lifestyle change linked to birth, death or marriage.

6.6In order not to disadvantage those employees participating in the scheme, both overtime rates and the annual pay review will be based on a notional pay figure (the original gross salary before tax efficient savings) to calculate elements of pay which are based on the employee’s gross salary e.g. cost of living increase, overtime, shift allowances.

6.7Entering into a Tax Efficient Savings Scheme will constitute a change in the terms and conditions of employment with the Trust.

6.8Implications

6.8.1Before entering a tax efficient savings arrangement, it is important for the employee to consider the effect, or potential effect, that a reduction in pay may have on:

  • Future mortgage applications;
  • Life insurance multiples;
  • Any pension scheme being contributed to;
  • Entitlement to Working Tax Credit or Child Tax Credit;
  • Entitlement to State Pension or other benefits;
  • Entitlement to Statutory Maternity or Adoption Pay, or Occupational Maternity, Paternity or Adoption Pay.

6.10.2Where there is a transfer of undertaking covered by the Transfer of Undertaking (Protection of Employment) Regulations (TUPE), the Trust would look to the new employer to take on any tax efficient savings obligation; however this will depend on agreements and circumstances at the time of the transfer.

7.TRAINING REQUIREMENTS

7.1Managers will be briefed on the content of this policy and will be able to seek guidance and assistance on its implementation from the Scheme lead.

7.2Articles on the schemes available to employees will be published in the LINK staff newsletter on a regular basis, when a new scheme is launched and when an existing scheme is amended.

8.REFERENCES AND ASSOCIATED DOCUMENTATION

HM Revenue & Customs EIM42750 – Salary sacrifice: what is a salary sacrifice: arrangement of guidance – Section 62 ITEPA 2003.

HM Revenue & Customs – Salary sacrifice/specialist

Trust Induction Policy

Trust Expenses Policy

9.EQUALITY IMPACT STATEMENT

Portsmouth Hospitals NHS Trust is committed to ensuring that, as far as is reasonably practicable, the way we provide services to the public and the way we treat our staff reflects their individual needs and does not discriminate against individuals or groups on any grounds.

This policy has been assessed accordingly

All policies must include this standard equality impact statement. However, when sending for ratification and publication, this must be accompanied by the full equality screening assessment tool. The assessment tool can be found on the Trust Intranet -> Policies -> Policy Documentation

Our valuesare the core of what Portsmouth Hospitals NHS Trust is and what we cherish. They are beliefs that manifest in the behaviours our employees display in the workplace.

Our Values were developed after listening to our staff. They bring the Trust closer to its vision to be the best hospital, providing the best care by the best people and ensure that our patients are at the centre of all we do.

We are committed to promoting a culture founded on these values which form the ‘heart’ of our Trust:

Respect and dignity

Quality of care

Working together

No waste

This policy should be read and implemented with the Trust Values in mind at all times.

Tax Efficient Savings Policy. Version 8
Issue Date: 30 January 2015
Review date: 22 January 2017 (unless requirements change)

Page 1 of 9

10.MONITORING COMPLIANCE WITH PROCEDURAL DOCUMENTS

This document will be monitored to ensure it is effective and to assurance compliance.

Minimum requirement to be monitored / Lead / Tool / Frequency of Report of Compliance / Reporting arrangements / Lead(s) for acting on Recommendations
Reviewed on a bi-annual basis / HR Manager / Review / Bi – annual or a significant change arises within national guidance / Policy audit report to:
  • HR Policy Group
/ HR Manager
Policy audit report to:
Policy audit report to:

The effectiveness in practice of all procedural documents should be routinely monitored (audited) to ensure the document objectives are being achieved. The process for how the monitoring will be performed should be included in the procedural document, using the template above.

The details of the monitoring to be considered include:

  • The aspects of the procedural document to be monitored: identify standards or key performance indicators (KPIs);
  • The lead for ensuring the audit is undertaken
  • The tool to be used for monitoring e.g. spot checks, observation audit, data collection;
  • Frequency of the monitoring e.g. quarterly, annually;
  • The reporting arrangements i.e. the committee or group who will be responsible for receiving the results and taking action as required. In most circumstances this will be the committee which ratified the document. The template for the policy audit report can be found on the Trust Intranet Trust Intranet -> Policies -> Policy Documentation
  • The lead(s) for acting on any recommendations necessary.

Policy for the Application of Tax Efficient Savings Schemes. Issue 8.November 2014

(Review date December 2015)Page 1 of 7