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The childcare voucher is the most popular perk, according to a Hewitt survey


Despite threats legislation could spell the end of the childcare voucher, this employee benefit has topped the list of the UK's most popular perks.

According to Hewitt's Flexible Benefits Survey, childcare vouchers are now the most popular benefit excluding pensions as they are offered by 98% of flexible benefit schemes.

Dental insurance is the second most popular benefit (offered by 92% of companies with flexible benefit schemes). Cycle-to-work schemes are the third most popular benefit and are offered by 91% of schemes.

While childcare vouchers are the most popular benefit, current proposals from the Government suggest scrapping tax relief on childcare vouchers by 2015.

The research also reveals a notable shift towards health-related benefits. Permanent health insurance is now offered by 67% of flexible benefit schemes, compared with 23% in 2007/08. Health screenings are now offered by 75% of companies, compared with 56% in 2007/08.

Overall flexible benefits have continued to grow in popularity in recent years. Hewitt's survey reveals 43% of UK employers have implemented or are in the process of implementing flex plans compared with 17% in 2003.

Martha How, head of reward consulting at Hewitt Associates, said: "Flexible benefits have traditionally been the domain of large multinational companies but we are now seeing small and medium companies taking a greater interest - not least due to the potential financial benefits such as national insurance savings. This is driving an increase in popularity, and flexible benefits are now reaching critical mass in the UK. We expect this trend to continue over the next five years."

Industry best practice dictates that all flexible benefit schemes gain formal HMRC approval. Despite this, 10% of organisations have not yet secured endorsement approval.

How added: "We were very surprised to see that one in 10 schemes have still not gained formal approval - this is much higher than expected. By operating a flexible benefits scheme without HMRC agreement on benefits tax treatment, companies are risking a potentially lengthy and painful investigation which could result in penalties, including back payment of taxes. We urge these companies to seek immediate approval. Companies that already have approval need to keep a close eye on changes."