RSS feedsConstruction companies are missing out on their share of £130m by failing to take advantage of the national insurance concession scheme. The holiday pay scheme is due to be withdrawn in 2012 and employers are running out of time to make the most of this opportunity.
At present, construction firms can pay up to five weeks of holiday pay free of national insurance contributions each year. Firms that are eligible for the government's concession are not liable for any national insurance contributions on their eligible employees' holiday pay. But companies need to act soon to avoid missing out on valuable savings that could be reinvested into other employee benefits to attract and retain skilled staff.
Since employers typically pay NI of up to 12.8% on holiday pay, this represents a significant saving. For example, if an employee is earning £18,000, the employer could save around £200 a year in national insurance contributions. It is estimated that the annual saving across the industry would top £130m.
The NI concession offers employers a valuable opportunity to use the savings to invest in employee benefits that will ensure they remain employers of choice even after the NI concession is finally withdrawn in 2012.
One option is to use a combined benefits package that incorporates a holiday pay scheme to take advantage of the current NI concession rules, together with other benefits that will act as powerful incentive tools to retain highly skilled staff.
The concession was withdrawn for other employers last October and is being withdrawn for all in 2012. Construction companies can use the concession for certain employees until then.
Not all construction workers will attract the concession and employees must be directly engaged in an eligible form of work for at least part of their time.
For example, while bricklayers and civil engineers will still qualify,
building material manufacturers and security guards will not.
Brian Griffiths is chief executive officer of
B&CE Benefit
Schemes
