The Covid-19 pandemic has prompted a shift in working practices, with many people working partly or fully from home. As fears grow for the small businesses in cities that rely on office workers for survival, it is no surprise that the government is encouraging workers to return to the office.
Aside from making the workplace safe for returning employees, employers may wish to consider what tax incentives could encourage a return to work. It has been reported that Bloomberg will pay employees £55 a day to return to the office. Such an incentive is not, however, particularly tax-efficient. If the office is the employee’s normal place of work, the payment will be taxable in the employee’s hands in the normal way.
With many workers wanting to avoid public transport, a popular option is for the employer to provide a cycle-to-work scheme. The scheme must be open to all employees and typically involves the employer lending or hiring bicycles to employees for a set period under a salary sacrifice arrangement, with the employee taking ownership at the end. The employee pays less for the bike, as well as spreading the cost, and the employer saves national insurance contributions (NIC).
Another option is to provide workplace parking. This would also be a tax-exempt benefit and would cover parking at the employer’s car park or the cost of parking at a public car park nearby. While employees working in town centres might welcome this option, it is likely to be less attractive for employers with a green agenda.
Given that the pandemic is ongoing, it is not surprising that even with the above benefits many workers do not want to rush back to the office. If an employer finds it has more employees wanting to work from home, it could enter into homeworking arrangements with those employees under which they can make tax-exempt payments for costs incurred for working at home. A temporary income tax/ NIC exemption for reimbursed expenses of home office equipment was introduced in the summer as a result of the pandemic but only runs until 5 April 2021.
Tracey Wright is a tax partner at Osborne Clarke