British American Tobacco offers flexible benefits through salary sacrifice

Case study: British American Tobacco

British American Tobacco (BAT) operates its flexible benefits scheme, Free2, through salary sacrifice. While holiday trading is the most popular benefit on offer, with about 10% of participants buying extra days and another 10% choosing to sell entitlement, the perks package also includes a wine club and clothes for work.

The wine club is not a tax-exempt benefit but clothes for work do qualify for tax exemptions. Of the 1,382 participants in the flex scheme 23 employees purchase wine, selecting between one and three cases to be delivered to their homes every quarter. A further 23 employees also select clothes for work and sacrifice between £500 and £1,500 for their clothes annually.

Malcolm Douglas, remuneration and benefits manager for BAT, says that while the employer saves on national insurance (NI) payments through the flex scheme, these savings do not totally fund the scheme. "The NI savings are a help, but they don’t offset the full cost. We’re doing it really to help build the employer brand," he says.

With the right advice and a little care, it is possible to make significant savings for both the employer and employee, while delivering valued benefits.