Through the flexible benefits module, your employees gain access to the entire Alleo marketplace of benefit partners, ranging from gyms and meal kits to childcare or education. As an employer, you facilitate a budget that can be spent on this marketplace. This budget can be a net contribution, or the employee can exchange gross/net salary with tax advantages.

Good to know: to allow your employees to use subscription services (such as the gym), a fixed monthly budget is required. This can start from as little as £10 per employee per month.

The benefits budget can be offered in two ways: as a net contribution or as a gross/net salary exchange. In both cases, the budget counts against the discretionary margin of the work-related costs scheme (WKR). However, with the exchange option, there are no additional budget costs for you as an employer, and you even save 20% on the exchanged amount since no employer charges are paid on this portion. Would you like to know more about the WKR or estimate your available discretionary margin? Read about it in this article.

Some benefit expenditures are exempt, such as those related to personal development. This means that these costs fall outside the work-related costs scheme and can be treated as regular business expenses. In Alleo, it is possible to offer a budget specifically for Personal Development, in addition to a general benefits budget, which can only be spent on benefits within this category.

Alleo itemizes these costs in the invoicing, making it clear what should and should not be accounted for within the WKR. This gives you full control over the WKR.

Imagine an employee signing up for a gym membership through Alleo. Firstly, employees benefit from collective discounts. A gym membership via Alleo is typically 10% cheaper than if you were to contract directly with the provider.

Additionally, the employee pays (a part of) the monthly membership costs from their budget, which is either fully covered by the employer or paid through a salary exchange. In the case of a salary exchange, the employee receives a gross/net tax advantage of 40% or more. The combination of the budget and the collective discount is therefore very advantageous for the employee. Moreover, it doesn’t have to cost you as an employer anything if salary exchange is chosen. On the contrary, it results in a 20% savings on employer costs on the exchanged salary.

You will still owe a final tax charge of 80% on the portion that is offered tax-efficiently outside the WKR. However, if you offer this through a salary exchange, you can still save 18% on social security contributions, so you actually end up paying only 62% in final tax.