Employee benefits can help small businesses in multiple ways, like competing for talent against larger employers, reducing the cost of staff turnover (replacing one employee costs UK businesses an average of £30,6142), and responding to the real cost-of-living pressure that's now the single biggest factor employees weigh up when choosing where to work.

Competing without a big budget

You might not be able to beat a large corporation salary, but you don't need to. What you can do is offer something these big companies often can't: benefits chosen for your specific team, delivered without three layers of approval.

The cost of getting it wrong

According to UK employee turnover analysis, staff attrition runs at around 34% a year¹, and replacing an employee costs an average of £30,614² once you count recruitment, onboarding and lost productivity.

In short, you could be looking at significant costs for your small business that add up to more than most benefits packages.

What UK employees actually value

A February 2026 survey of 2,000 UK employees³ found paid sick leave (66%), inflation-matching pay rises (60%), flexible working hours, pension contribution matching and extra holiday allowance rank as the top five most-valued benefits. 

What’s more, the same research found a real gap between what employees want and what employers actually offer. So let’s take a look at benefits: what’s required, what’s optional, and what will work for your business.

By law, you must provide a workplace pension for eligible staff, statutory sick pay, at least 5.6 weeks' paid holiday, and statutory family leave pay where it applies.

Everything else is an optional extra.

This is just a top-level summary with figures taken from GOV.UK, not the full detail. For eligibility rules and how each is calculated, take a look at our full guide to employee benefits in the UK. 

Beyond the legal minimums, small businesses typically choose from five categories:

• Low-cost extras like flexible working or recognition rewards
• Perks and discounts
• Health and wellbeing
• Financial benefits like salary sacrifice or pension top-ups
• Protection such as life cover

We find that most small businesses choose from two or three of these categories to create a benefits package that best suits their people.

Interested in learning more about salary sacrifice? Check out our full guide to salary sacrifice benefits. Plus, you can find out more about our Cycle to Work salary sacrifice benefit here.

For perks, recognition and wellbeing in more depth, see our perks and discounts, recognition and wellbeing pages.

If you don’t have any budget to work with, that’s ok. Focus on flexible working opportunities, extra holiday, and giving genuine recognition to teams. 

Once you’re ready to invest, add an EAP or a perks and discounts platform, then health cover as your team and budget grow. Private medical insurance and enhanced pensions are premium-tier decisions, not a starting point.

Costs at each level vary by provider and team size, so it’s worth asking for a tailored quote.

Quick tip: If you only do three things: introduce structured recognition (it's free), add an EAP (it's one of the cheapest benefits per head and covers a real risk), and ask your team what they'd actually use before spending on anything else.

Direct answer: it depends on which benefits you take on.

Some of the most valued ones, like flexible working and genuine recognition, cost little or nothing, while insurance-based cover costs more.

Many providers, including Perkbox, offer cost-effective packages designed for small businesses. That means you can offer competitive benefits without the enterprise price tag.

What shapes the cost?

• Which benefits you choose: a package built around perks, recognition and wellbeing support sits at a very different level to one that adds insurance-based cover, such as private medical insurance. Start with the essentials and add more as you grow.
• How many people you cover: most providers price on headcount, so your costs grow with your team rather than arriving as one big upfront bill.
• How you deliver it: sourcing each benefit separately, using a broker or using a single platform all differ in cost, both in money and in the time your team spends managing them.
• What’s bundled together: some providers combine several benefits in one package. That can work out more cost-effective than buying each separately, and usually means less admin.

As costs can vary so much, the most useful figure is one based on your own team and priorities. Perkbox’s small business packages are designed to give you comprehensive benefits and wellbeing support on a smaller budget. Book a demo to find out more.

How to set a benefits budget

• Start from a per-head monthly figure, not a lump sum; it scales naturally as you hire.
• Benchmark against your turnover cost. Replacing one employee costs an average of £30,614, so a benefits spend that meaningfully improves retention can pay for itself many times over.
• Review annually, not just at renewal. Needs shift as your team grows and ages. Be sure you’re ready to keep pace.

Under salary sacrifice, an employee gives up part of their gross salary in exchange for a benefit, like a bike for their commute, tech, or extra pension contributions, and - depending on the scheme - pays less Income Tax and National Insurance as a result. Under certain schemes, employers also pay less employer NIC on the sacrificed amount. 

For 2026/27, employer NIC is charged at 15% above a £5,000 secondary threshold, and most small businesses can offset this against the £10,500 Employment Allowance10, so check whether you're already covered before assuming salary sacrifice will reduce your NIC bill in practice.

Worth knowing: From 6 April 2029, National Insurance relief on salary-sacrificed pension contributions will be capped at £2,000 a year. Contributions above that will attract NIC as normal (National Insurance Contributions (Employer Pensions Contributions) Act 2026)11. It doesn't change anything today, and typical small business pension top-ups are well under this threshold, but it's worth knowing if you're planning further ahead.

Other NIC exempt benefits

• Employer pension contributions (within normal limits)
• Cycle to Work equipment provided under a compliant salary sacrifice scheme
• One work-related mobile phone per employee
• Annual health screening and eye test where required for screen work

1. Set a budget. Use a per-head monthly figure rather than an arbitrary total, as this will help you to scale up as your business evolves.
2. Ask your team what they want. A five-minute anonymous survey beats guessing, and it's the single best predictor of whether a benefit actually gets used.
3. Cover the legal basics. Confirm your pension, SSP and holiday entitlement are compliant before adding anything optional.
4. Pick quick wins. Structured recognition and an EAP are cost-effective, fast to set up, and cover real, common needs.
5. Choose how to deliver it. Whether you go DIY,  choose a broker, or implement a benefits platform is up to you. See the comparison table below to help make your choice.
6. Launch and communicate it properly. A benefit nobody knows about might as well not exist; tell people clearly, more than once.
7. Measure use and review every year. If something isn't being used six months in, that's a signal to change it, not just renew it.

DIY vs broker vs benefits platform

• Copying an enterprise package. What works for a 2,000-person company with a benefits team rarely translates to a 20-person business, and it's rarely the cheapest way to get the same result.
• Not asking staff what they want. The most expensive benefit is the one nobody uses.
• Poor, inconsistent communication. A benefits brochure sent once at induction gets forgotten by month two.
• Ignoring the tax detail. Assuming something is tax-free without checking can turn a goodwill gesture into an unexpected P11D bill.
• Set and forget. Needs change as your team grows; a package that made sense at 10 people may not fit at 50.

Perkbox for small businesses: the employee benefits app that does the heavy lifting.

Running a small business means doing more with less, including looking after your people. Perkbox brings wellbeing and benefits into a single, simple app. It’s built to fit a tight budget and designed to make a difference using minimal team resource. 

With options built for teams of roughly 10 to 100 people, it provides the essentials to help your people feel valued and your business grow. It gives you comprehensive benefits and wellbeing support to help you care for, connect with and celebrate your people.

What's included:

• Perks and discounts: everyday savings from brands your team already shops with.
• Salary sacrifice schemes: options like Cycle to Work, spread through payroll.
• Online GP and EAP: support for physical and mental health, when your people need it.
• Admin support like the Culture hub: one place for company news, values and recognition, so you’re not running it all by hand.