UK housebuilder Barratt is offering its staff the chance to invest in the company’s own tax-free Individual Savings Account (ISA).
The Company ISA, provided by insurer Legal & General, is thought to be one of the first workplace benefits of its kind in the UK.
It will provide Barratt employees with the same tax efficiency as a personal ISA, but with the added benefits for employers and employees of lower administration charges and the convenience of making payments from payroll deductions.
The stocks and shares ISA, which starts in August, has an annual allowance of £10,200 for the 2010-11 tax year. It has no income tax or capital gains tax, enabling employees to potentially save substantially on investment returns.
Jayne Mee, people and customer experience director at Barratt Developments, named ‘HR Director of the Year’ at the 2009 Personnel Today Awards, said the firm introduced the scheme as part of a package of benefits for employees.
Mee told Personnel Today: “[The ISA] is part of a package of flexible benefits for employees, including childcare vouchers and a cycle-to-work scheme.”
Paul Waters, senior consultant at pension adviser and management specialist Hymans Robertson, which advises Barratt on employee benefits, said: “[Barratt’s ISA] marks the start of a shift towards employers offering employees more choice over savings vehicles, rather than just pensions.”
Employers could use such schemes as a recruitment tool, while employees get access to financial products at a lower charge than on the high street, Waters said.
He added: “Expect a trend of the most forward-thinking organisations introducing such products, and then providing flexibility over how employees can access and spend company funding that might traditionally have been ring fenced for pension only. This new ‘wealth creation’ approach could be one of the most fundamental changes to the way employers provide benefits for many years.”