Inez Anderson, employee issues tax partner at the firm, said: 'While notice was given in the March Budget about these NIC increases, companies do not appear to have paid it much attention.
'It is going to have a significant effect on staff costs and we are worried that companies will start reviewing the benefits they offer to existing and potential employees. That would have a detrimental effect on recruitment and remuneration policy.'
KPMG has provided the following example:
For an employee who has season ticket and other interest-free loans totalling 6,000 pounds, free local gym membership costing 575 pounds a year and BUPA family membership at 600 pounds, the additional cost to the employer will be almost 190 pounds a year.
Multiply that by 50 employees and the company would have to pay an extra 10,000 pounds a year.
For large companies with several thousand employees the figure might be 500,000 pounds or more, depending on the benefits offered.
Currently employers NICs on employee benefits apply only to company cars and private fuel.
The decision to impose employer class 1A NICs on most staff benefits was taken in the March 1999 Budget but details only emerged in an Inland Revenue press release on 19 November.
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