What is a Remuneration Package?
You may have been asked “what is your total remuneration package expectation?” during a job interview recently, and it’s possible that it might’ve stumped you if you weren’t expecting it.
The truth is that the employer is simply asking you what your expectations are relating to your salary, bonuses and work perks.
Here, we define remuneration packages, explain what they are and give you some examples of what benefits might be included in yours.
What is a total remuneration package and what does it mean?
A total remuneration package can be defined as a collection of benefits offered to an employee by their employer. They always include your wage or salary, but more appealing packages will also offer other bonuses, such as company cars, mobile phones, accommodation and even gas or electricity allowances.
Employers use competitive remuneration packages to attract (and retain) the very best employees.
As an employee, your total remuneration package should be representative of your value to the business, and remember that you can always negotiate this with your employer.
Examples of remuneration packages in the UK
Salaries and work perks differ depending on the company you work for and your role; for example, a senior CEO’s remuneration package might include far more valuable benefits in comparison to that offered to a junior assistant.
A competitive remuneration package can include any of the following:
- Salary or wages
- Expense reimbursements
- Travel expenses
- Mobile phone
- Bonus schemes related to performance
- Childcare costs
- Healthcare costs
- Share incentive plans
- Additional pension provision
- Company car (or fuel expenses)
- Gas or electric allowances
It would be impractical to expect all of these benefits within your remuneration package, but the best companies out there will offer some of them as an incentive to employees.
For instance, an example of a remuneration package might include:
- £25,000 salary per year
- A company iPhone
- Travel and accommodation expenses when travelling for business
It is important to note that many company benefits will come with tax obligations, so it’s important that you weigh-up how tax-efficient your package is before signing on the dotted line.
Paying tax on company benefits
Tax will be applied to some of the company benefits you receive, including perks such as company cars and accommodation expenses.
According to the government, you are required to pay tax on the value of the benefit to you, which is determined by your employer. Your employer arranges these tax payments and they should be deducted from your salary as normal through Pay As You Earn (PAYE).
Your tax obligations depend on the type of benefits or incentives you receive and how much they’re worth, but don’t stress about working this out because your employer should do it on your behalf. You should, however, calculate whether or not your package is tax-efficient before accepting it, as previously mentioned.
How much tax you’re required to pay can be complex as each perk is considered individually, but you can find out how company benefits impact your current obligations by using the government’s income tax checker.
You are required to pay Benefit-in-Kind tax (BIK tax) on company cars, for example, but the amount you pay depends on its value, CO2 emissions, and how often you use it.
See our full guide to company car tax for more information.
Some other taxable company benefits include living accommodation, interest-free or low-interest loans over £10,000, and medical insurance or healthcare.
Bear in mind that some company benefits are tax-free, such as childcare fees, which you might want to consider if your current perks are being taxed heavily.
Types of remuneration packages
There are many different types of benefits and incentives that can be offered alongside your typical salary or wage, and for employers, providing competitive remuneration packages is a useful way of attracting and retaining the best employees.
Employees are able to negotiate their total remuneration package with their employer either before they join the company, or later down the line (during a salary review meeting, for example).
As an employee, you should set realistic expectations for your annual remuneration package and benefits so that it represents your role at the organisation.