Employee Benefits for Small Businesses UK 2026: What to Offer (Without Breaking the Budget)

Small businesses often compete for talent against employers with bigger budgets, dedicated HR teams, and well-established benefits packages. It’s easy to assume you can’t offer the same level of support.

The reality is that some of the most valued employee benefits cost very little – and in some cases, nothing at all. EV salary sacrifice, flexible working policy, and learning and development budgets are low-cost employee benefits you could implement within weeks.

SMEs account for 99.9% of UK businesses and 61% of employment – they collectively spend billions on wages but relatively little on benefits. Many small businesses are surprised to discover that EV salary sacrifice costs nothing to introduce and is completely cost-neutral to run, generating valuable employer National Insurance savings. 

Calculate what your employees could save on an EV in just minutes with our salary sacrifice calculator. 

What Do Small Business Employees Want Most?

The cost-of-living crisis has shifted employee expectations and priorities. Recent CIPD and Aviva research shows flexible working, financial wellbeing and career development remain among the highest-ranked employee priorities.

Small business employees want benefits that help their monthly budget, day-to-day living, and career progression. While workplace perks matter, financial security is what employees value most. Employees are increasingly prioritising benefit schemes that offer higher take-home value, savings opportunities, and pension support.

While free snacks, office perks, and team events are nice, it’s practical cost-saving benefits, such as EV salary sacrifice, that will convince a potential employee to join your small business. 

Small businesses often fall for the misconception that employees want expensive perks. In reality, most employees place greater value on flexibility, reduced commuting costs, financial support, and career development. 

This misconception often leads small businesses to overspend on underused gym memberships, office perks, and one-off reward schemes. These employee benefits are often more expensive than the schemes your employees actually want. The best employee benefits aren’t necessarily the most expensive ones, but the ones your employees will use.  

Best Employee Benefits For Small Businesses - Ranked By ROI 

As a small business, every pound matters to your budget. When comparing different employee benefits, it’s important to judge them by the employee value, employer cost, and administrative complexity. Below, we’ve ranked 8 of the best employee benefits for small businesses: 

1. EV Salary Sacrifice 

An EV salary sacrifice scheme allows employees to change part of their gross salary for an electric vehicle. It has a net-zero cost for employers and offers employees potential savings of £2,000 to £5,000 annually. 

The National Living Wage floor means salary sacrifice suits employees earning £25,000+ most effectively. Since April 2025, employers save 15% NIC on every pound sacrificed.

EV salary sacrifice has a net-zero cost for employers and can save employees thousands of pounds per year compared with funding the same vehicle from take-home pay. Employees can often save between £2,000 and £7,000 per year compared with a personal lease, depending on salary, tax band and vehicle choice.

Many EV salary sacrifice providers, including loveelectric, include insurance, servicing, maintenance, tyres, and breakdown cover within the monthly package. These employee benefits make a salary sacrifice scheme the most affordable way to drive an electric vehicle in the UK.

An EV salary sacrifice scheme is suitable for most small businesses. It comes with the added benefit of enhancing your company’s sustainability credentials, which may make your company more attractive to younger and eco-conscious employees. 

Many providers, including loveelectric, have no minimum headcount requirement and handle most of the ongoing administration. Loveelectric’s Zero Risk Guarantee provides support from Day 1 if an employee's circumstances change. Learn more about the employer benefits of EV salary sacrifice in our guide for employers.

2. Flexible / Remote Working Policy 

Remote and flexible working policies have become more widespread since the pandemic, but formal flexibility around location and working hours remains a popular employee benefit. Flexible working costs the employer nothing and is rated the top non-financial benefit by employees under 40. 

Small businesses of any size can adopt this policy, so long as it’s suitable for their industry and workflow. Virtual meetings and cloud systems mean that most employees can work from anywhere with a reliable Wi-Fi connection. 

3. Enhanced Pension Contributions

Enhanced pension contribution schemes enable employers to contribute above the statutory minimums. This scheme gives employees a strong long-term financial benefit, but at a moderate cost to the employer. 

It’s relatively straightforward for most small businesses to navigate with no minimum company size. 

4. Learning and Development Budget

Many small businesses opt to set aside an annual allowance for training, qualifications, courses, and professional development schemes. The cost of these allowances can vary, depending on company size and industry, but they have a high retention impact. 

This employee benefit scheme is available for companies of all sizes and is relatively straightforward with the support of a HR department or leadership team.

5. Cycle to Work Scheme

A salary sacrifice scheme for bicycles and equipment may be a popular option if your small business is based in a city or urban area. These schemes offer moderate value to employees at minimal cost to the small business. Although relatively straightforward, the ROI of this type of scheme will depend on your individual employees and your office location.

6. Extra Annual Leave or Leave-Buying Scheme

Working from home isn’t the only type of flexibility that can be offered through an employee benefit scheme. Some businesses choose to give their employees additional holiday allowance or the option to purchase extra leave. It’s a low-cost scheme for employers with high value for employees and straightforward to implement. 

7. Mental Health Support / EAP 

Healthcare is increasingly becoming an attractive employee benefit in the UK, including confidential mental health support services. This employee benefit scheme offers moderate to high value, being extremely subjective to your employees’ needs, but has relatively low running costs. Most schemes are widely available to small businesses of all sizes.

8. Private Health Insurance 

Private healthcare coverage is one of the most expensive employee benefits in the UK, although it offers high value for employees. Most private health insurance schemes require small businesses to have at least 5+ employees to be eligible. 

These schemes are moderately complex to implement and offer, although providers typically offer support during the onboarding process. Although private health insurance can be valuable, it is often difficult for smaller businesses to prioritise early on. 

Why EV Salary Sacrifice Is The Best Benefit For Small Businesses Specifically

An EV salary sacrifice scheme has a net-zero cost for businesses. Unlike most benefits, EV salary sacrifice does not require the employer to fund the vehicle. Instead, the employee pays for the vehicle by sacrificing part of their gross salary. 

This scheme actually saves small businesses money as employers save 15% on the National Insurance Contribution for the salary sacrificed. 

Let’s see how this works:

A company has 10 employees who make a £600 monthly sacrifice.

The annual employer NIC saving:

£600 x 10 x 12 x 15% = £10,800 saving per year

EV salary sacrifice schemes help small businesses compete against larger employers when recruiting and retaining talent. Employees receive the same benefits, regardless of company size. A 10-person small business can offer the same EV package as a multinational organisation. 

Setting up an EV salary sacrifice scheme is easy, with most going live in less than 2 weeks. There’s minimal HR involvement, and providers such as loveelectric handle the ongoing administration. 

Calculate what your employees would save on an EV with our salary sacrifice calculator. 

How To Implement A Benefits Programme On A Small Business Budget

Benefit programmes help to level the playing field when small businesses are competing against larger corporations. Whether you’re hoping to boost productivity, improve employee retention, or attract top-tier talent, most benefit programmes offer a valuable ROI for small businesses.

The right benefits programme will support your team’s wellbeing, foster loyalty, and reduce the cost of staff turnover. Not every benefits programme will suit your employees or company, and it’s important to consider it as an evolving part of your business growth strategy.

Here’s a step-by-step breakdown on how to implement a benefits programme as a small business:

Step 1: Ask your team 

Don’t invest in what your employees don’t want. Start by asking your team what employee benefits would make the biggest difference to their day-to-day life. Avoid making assumptions and consider a simple anonymous survey.

Step 2: Start with zero-cost and tax-efficient options first

Avoid going directly to the more expensive benefits. Zero-cost and tax-efficient options should be your first choice, especially as many of these offer the most value for employees. Flexible working, EV salary sacrifice schemes, and a cycle to work programme can be implemented within just weeks.

Step 3: Add one paid benefit per year as the business grows

Prioritise employee benefits based on demand and your budget. As your small business grows, you can start to add one paid benefit per year. More expensive benefits, such as EAP and enhanced pension contributions, may become more attainable as your business grows. 

Step 4: Communicate everything clearly 

Communication is what ultimately determines how successful an employee benefit scheme is. Many employees are unaware of available benefits, even at small businesses. Plan how you’re going to communicate a new benefit to employees, including through regular summaries and annual reminders. 

Step 5: Review annually — what's being used vs. wasted spend

Employee benefits should be reviewed annually, just like any business expense. It’s important to assess employee usage, feedback, and the cost-effectiveness of each scheme. Remove any benefits that are underused and expand those that employees value. 

Frequently Asked Questions 

What employee benefits can a small business afford?

Many of the most valued employee benefits cost little or nothing. Flexible working, EV salary sacrifice, and learning budgets often deliver the highest return on investment with low or net-zero costs.

Can a business with 5 employees offer EV salary sacrifice?

Yes, there is no minimum employee requirement for joining loveelectric’s EV salary sacrifice scheme. Small businesses are able to offer the exact same scheme as larger employers. 

What's the cheapest employee benefit to implement?

Flexible working policies are often the lowest-cost benefit that can be offered to employees. EV salary sacrifice is another strong option because it has a net-zero cost for employers and can save employees thousands annually. 

What employee benefits help SMEs compete with large employers for talent?

Financial wellbeing benefits, flexible working, and EV salary sacrifice can help level the playing field when small businesses are competing with larger employers for the same talent. These benefits often have more impact than traditional workplace perks and can be more cost-effective.

Are employee benefits taxable for small business employers?

Some benefits are taxable, while others receive favourable tax treatment. Salary sacrifice arrangements, such as EV salary sacrifice schemes and pension contributions, are examples where tax efficiency can play a significant role. 

loveelectric makes it easy to get an EV salary sacrifice scheme online in just 2 weeks with a net-zero cost. As a certified B Corp with a 102.0 impact score, loveelectric helps small businesses offer meaningful employee benefits without increasing costs.

‍Discover how salary sacrifice works and check your company’s suitability in just seconds by using our salary sacrifice eligibility checker.