Non-Share-Based Employee Benefit Schemes

The main types of non-share-based employee benefit schemes offered by David Craddock Consultancy Services are as follows:-

Employee Benefit Trusts

The company makes a cash contribution to a discretionary employee benefit trust for the benefit of the beneficiaries who are employees and former employees of the company and certain of their relatives as defined in the trust deed. On the recommendation of the company, the trustees use their discretion to provide benefits to beneficiaries. These benefits include distributions, beneficial loans, use of assets and, indeed, any benefits that may otherwise be provided through the company.

Cash Profit-Sharing Scheme

The company makes available a sum of money for distribution to employees, usually calculated as a percentage of net profit. The allocation to each eligible employee can be on an equal basis or, alternatively, be linked to a combination of length of service, salary levels and grades. Although this arrangement does not offer employee tax reliefs the scheme is employee motivational and the pay-out is corporation tax deductible for the company.

Profit-Related Pay Scheme

The company allocates a pool of money for distribution to employees, most frequently based on the increase in profit from the previous year. The tax reliefs for employees on this scheme are no longer available although the arrangement offers significant employee motivational advantages. The pay-out is corporation tax deductible for the company.

Flexible Benefits Scheme

The company decides on the total level of remuneration for each employee. This total figure includes cash salary remuneration and other non-cash benefits. The employees have the opportunity to choose from a range of non-cash benefits and to decide within given limits on the proportion of cash to non-cash. Properly structured this arrangement can offer considerable savings to the company and substantial discounts to the employees.

Target Incentive Scheme

The company introduces a specific incentive linked to the achievement of specific targets. The scheme may relate to a specific group of employees, say, the sales team or a production unit. Tax advantages can be achieved through linkage to a Cash Employee Benefit Trust.

Long Service and Retirement Award Schemes

The company rewards employees for service at typically 5 or 7 or 10 years with the business. As a means of recognising the worth of employees, this scheme is very popular with many companies within the UK. Tax advantages can be achieved through linkage to a Cash Employee Benefit Trust.