Deloitte provides advice and solutions to employers covering areas of reward from strategic design to on-going tax compliance. Our support helps clients tailor reward packages to attract, motivate and retain key employees, in a manner which is competitive, tax efficient and tailored to the specific needs of the business. We can help employers to develop and maintain robust systems and processes which enable them to achieve ongoing employment taxes compliance.
Issues and trends
There has been a raft of significant legislative changes which are impacting on remuneration arrangements and in addition, the ‘remuneration debate’ is now firmly in the public domain. Alongside this, there is an increased stakeholder focus on tax planning and cost reduction, as well as the associated reputational issues to consider. As a result, there is now more than ever a real need for the HR, reward, tax, legal, finance and regulatory / risk functions within a business to work together in relation to implementing and administering remuneration policy.
The key trends in remuneration planning are as follows:
- Minimising risk through forward planning – There is a huge amount of uncertainty in the markets which is compounded in the remuneration planning and tax space due to legislative and regulatory changes. Anticipating the impact on a business as a result of these changes is vital in ensuring that the risks associated with these changes (for example, non compliance with PAYE and NIC withholding) are managed.
- Reducing costs – There is a continuing emphasis on increasing the value of existing remuneration structures and ensuring that compliance costs are minimised. This is resulting in a greater focus on potential areas for out-sourcing and automation to leverage efficiencies.
- Ensuring systems and processes are robust – The changes to long established tax rules, such as the introduction of the statutory residence test and the disguised remuneration legislation require employers to track data more carefully and ensure decision-making processes are carefully documented. We have seen an increased focus from both HM Revenue & Customs and the regulators such as the Financial Services Authority on “thematic” reviews of remuneration arrangements. Our expectation is that these types of reviews will increase in numbers reflecting the wider move towards a risk-based compliance environment.
We help our clients develop solutions that also consider their commercial objectives. Our offerings include:
- Designing and implementing tax efficient cash and equity incentive arrangements, both for UK and international employee populations. These include our SMART Benefit® salary sacrifice and flexible benefits arrangements.
- Undertaking reviews of existing arrangements and advising on appropriate changes required to manage on-going compliance and enhancing benefit provision
- Advising on the economic impact of alternative remuneration structures for both the employer and employee.
- Developing post tax wealth creation structures.
- Advising on the regulatory position in relation to remuneration structures which utilise in-house investment opportunities and the strength of employers purchasing power to leverage benefits for employees.
- Providing advice across the full range of employment tax, including incentives and rewards (cash and equity), employment status, termination payments and tips and gratuities.
- Advising on how to manage the relationship with HMRC, including assistance with compliance reviews, voluntary disclosures and negotiating settlements and penalties.
- Working with employers to review their systems and processes for employment tax compliance purposes.
- Advising and assisting with year-end employment tax reporting and compliance in relation to cash remuneration, benefits and expenses and share schemes.