People & Leadership

4 simple ways to motivate and retain talented employees

Implementing GDPR for your business doesn't have to be taxing

No matter what size an employer is, the issues they face when it comes to employing and retaining the best talent are the same. How do we attract the best talent and how do we motivate and retain talented employees?

There are many things that can help your business become an employer of choice, from your HR process to your company values, remuneration and benefits packages, and additional perks that are offered to your employees.

You need to ensure the overall remuneration package on offer is well considered and fit for purpose. This includes understanding what’s important to your employees and offering a remuneration package that is flexible and can be tailored towards the needs of each individual. Read on for four ways to incentivise your workforce and benefit your business.

1. Do a review of existing remuneration

At the simplest level, you should review the way you currently provide remuneration to your employees.

There are a number of ways in which remuneration can be paid in a more tax-efficient manner, including salary sacrifice schemes, making subsistence payments in line with HMRC’s scale-rates, reimbursing your employees for genuine, receipted business expenses and changing the way in which bonuses are awarded.

Your business could make substantial savings through the introduction of salary sacrifice schemes. As employees now need to be auto-enrolled into workplace pension schemes, implementing a pension salary sacrifice scheme is normally beneficial as both your business and your employees save National Insurance Contributions.

The government has also confirmed it is happy for the tax benefits of salary sacrifice schemes to continue where they relate to employer-supported childcare schemes (although these will be closed to new entrants from October 2018) or the cycle to work schemes. Many highly regarded employers offer such schemes.

Caution is advised when implementing salary sacrifice schemes as there are conditions that need to be considered. A salary sacrifice, for example, cannot reduce an employee’s wage to less than the National Living Wage and you need to be aware that the rules for some salary sacrifice schemes changed recently.

If your business is offering any other salary sacrifice schemes or optional remuneration arrangements to your employees, you should ensure you’ve considered the impact of the recent changes on your workforce.

2. Conduct regular reviews of benefits packages

Your business should review the benefits packages offered to your employees on a regular basis. Tax rules change every year and something that was considered a tax efficient perk a few years ago may now be much more expensive for both you and your employees.

An example of this is when companies offer a car to a new employee. The member of staff often doesn’t realise that the cost of a company car can go up substantially over time simply due to tax rates changing.

As an example, the tax cost of a petrol company car with a list price of £20,000 and CO2 emissions of 75g/km has changed/is changing as follows:


Tax year BIK % of list price BIK charge Employer NIC Employee tax @ 20% Employee tax @ 45%
2013-14 5% £1,000 £138.00 £200 £400
2017-18 13% £2,600 £358.80 £520 £1,040
2019-20 20% £3,800 £524.40 £760 £1,520


An employee may have a company car that is currently four years old and the tax cost could now be more than double what it was when the car was brand new (for both the employee and their employer). This will increase further by 2019-20.

It is often cheaper for you to offer a taxable car allowance than it is to offer a company car to an employee – but you need to be aware that there may be expensive tax complications if you offer employees a choice between the two.

In addition, the rules are changing on tax-efficient childcare arrangements, with the existing Employer Supported Childcare being phased out and replaced with Tax Free Childcare. If your employees have young children, make sure you are considering whether or not they will benefit from being in a particular scheme.

Its worth reviewing your company car policies on a regular basis

3. Make the most of available tax reliefs and exemptions

There are many inexpensive benefits that could be provided under a tax exemption. Examples include employer pension contributions, employer-provided mobile phones, and benefits and awards provided in association with employee suggestion schemes.

You could take some very simple steps such as raising employee awareness of tax reliefs that may be available to them. This helps to show that your business is thinking about your employees’ best interests.

For example, if you pay an employee using their own car for business at less than HMRC’s approved mileage allowance payment (AMAP) rates then the employee could claim tax relief from HMRC on the difference.

An employee who has been reimbursed at 15p per mile and travelled 5,000 business miles in a tax year could receive a tax repayment of £300 if they are a 20% tax payer or £600 if a 40% tax payer.

Your employees may also be able to claim tax relief from HMRC in respect of expenses they incur while doing their jobs. Relief can be obtained for things such as repairing or replacing small tools required for an employee to do their job or for cleaning, repairing or replacing specialist clothing.

4. Take advantage of employee share schemes

Employee share schemes are a great way of incentivising your employees. The benefits are two-fold: your employee feels valued as they receive a chance to participate in the company’s share capital and your business benefits as the employee share scheme can be structured so it is directly related to employee performance and business growth.

Share schemes improve employee engagement and help to align your goals with the overall business strategy.

Some businesses offering greater holiday entitlement (or even unlimited holiday in extreme cases) or being increasingly creative about the facilities that they offer onsite such as parking, recreation facilities, well-furnished kitchens and break out areas, along with some favourites such as pool tables.

Different things will be important to different employees. Their preferences will depend on their personal and family circumstances, their level of experience and seniority, their salary and what other employers would offer to them.

Providing choice is becoming increasingly important. What appeals to a 38-year-old mother who heads up HR is unlikely to be as important to a 20-year-old sales counter worker and vice versa. As staff are able to work without a forced retirement age, the diversity of staff ages will increase (as will the importance of a good company pension scheme).

Benchmarking against competitors and being able to offer tax-efficient flexible options across your workforce are key to achieving employer of choice status.

What is your business doing to retain talented employees? Let us know in the comments below.

The guide to people and payroll

Want to motivate your employees, manage the run-up to payday and improve your payroll processes? Get you free guide and use it to get your people and payroll processes working effectively.

Get your free guide
The new tax year will have a number of changes and initiatives to be aware of