# How to build a financial wellbeing programme

> Build a UK financial wellbeing programme: diagnose need, set objectives, choose pay advances, savings, loans and advice, and check deductions.

Source: https://lumihr.co.uk/guides/how-to-build-financial-wellbeing-programme
Author: David Whitfield (https://lumihr.co.uk/about/david-whitfield)
UK law as at: 20 September 2026
Review by: 1 April 2027, when minimum wage rates next change

---
*By David Whitfield · Reflects UK law as at 20 September 2026 · Review by 1 April 2027*

> **In short**
> - Payroll deductions need contractual authority or the worker's prior written consent, and each pay period must pass the minimum wage check.
> - The FCA does not usually regulate employer salary advance schemes. Cheap employer loans are taxable once their combined balance goes above £10,000 in the tax year.
> - In the lumi reward benchmark, 41.6% of organisations have a documented financial wellbeing strategy (n = 267).
> - By the end you will have a diagnosis, objectives, recorded component choices, a deductions check and a measurement plan.

## Before you start

**Legal basis.** Rules on deductions from wages [5] and minimum wage pay [6] apply to every component; other rules are in each step.

**Who to involve.** Reward or HR, payroll, finance, your data protection lead, and legal or compliance for provider contracts.

**What you need.** Pay data by hourly rate and frequency, current deductions and benefit take-up data.

## Step 1: Diagnose need

- **Anonymous survey.** Ask about running short before payday, borrowing for essentials, savings and money worries. Report only groups large enough to protect anonymity.
- **Pay data.** Map headroom above the minimum wage, pay frequency and variable hours.
- **Take-up.** Review hardship and pay advance requests, pension opt-outs and money-related EAP contacts.

In the lumi reward benchmark, 72.4% of organisations provide an Employee Assistance Programme (EAP) (n = 268). See the [full findings](/research/wellbeing-financial-wellbeing-2026).

## Step 2: Set objectives

Write down the programme's purpose, who it covers and how you will judge it. Examples: less reliance on high-cost credit, more emergency savings, earlier debt advice. Tie each objective to a measure in Step 9.

In the lumi reward benchmark, 41.6% of organisations have a documented financial wellbeing strategy, the common answer. 36.7% have none and 21.7% have ad hoc provision (n = 267).

**◆ Decision: universal or targeted?**
- *Universal:* simple and singles no one out. Spend reaches people who may not need help.
- *Targeted at lower-paid or frontline staff:* spend follows the diagnosis. Needs objective criteria.

## Step 3: ◆ Decide on earned wage access

**Regulatory position.** Earned wage access lets employees draw earned pay before payday. The FCA "does not usually regulate ESAS as an early advance of salary provided by an employer does not involve the provision of credit" [2]. MoneyHelper notes that employees cannot complain to the Financial Ombudsman Service, and that providers should have signed the Earned Wage Access Code of Practice [3]. The FCA warns that repeated fees can equal an interest rate above the payday loan price cap, and suggests repeat-use alerts that signpost free debt advice [2].

**Payroll.** Since 6 April 2024, a qualifying advance can be reported to HMRC on or before the contractual payday. Conditions: pay at regular intervals of one week to one month, an advance that reasonably represents work done, and regular pay reduced by the advances [4].

In the lumi reward benchmark, 30.7% (15.7% + 15.0%) of organisations let employees draw pay early: 15.7% for hourly or frontline staff only and 15.0% for all eligible staff. 66.7% do not, the common answer, and 2.6% are piloting (n = 267).

**◆ Decision: who pays the fees?** 75.3% of organisations fund them (common). 16.9% have employees pay per transaction and 7.9% use a subscription, both rare (n = 89).
- *Employer-funded:* no cost to employees. Your cost depends on use.
- *Employee-paid:* lower employer cost. Repeat users bear most of the fees.

**◆ Decision: cap the amount?** 55.1% have no cap (common), 39.3% allow up to 50% of accrued pay (alternative) and 5.6% use another limit (rare) (n = 89). Rare describes how many organisations chose an answer, not whether it suits yours.
- *No cap:* most flexible. Payday pay can drop sharply.
- *A cap:* protects part of payday pay. Less help with large costs.

## Step 4: ◆ Decide on payroll or sidecar savings

The FCA's 2025 statement covers opt-in schemes where agreed pay goes automatically into an accessible cash savings account [7]. A scheme can be set up so the employer does not carry out a regulated activity, particularly where funds pass to the provider rather than staying with the employer. Accounts should be in employees' own names, and data sharing needs a lawful basis under UK GDPR [7].

In the lumi reward benchmark (n = 265, multi-select), 13.6% of organisations offer a workplace ISA or general investment account, 7.9% a credit union payroll deduction and 7.5% sidecar or emergency savings. 74.0% offer none.

**◆ Decision: which vehicle?**
- *Cash savings (payroll, sidecar or credit union):* easy access for emergencies. Low growth.
- *Workplace ISA or investment account:* suits longer-term goals. Values can fall.

## Step 5: ◆ Decide on employer loans or a hardship fund

**Consumer credit.** An employer loan is usually exempt from consumer credit regulation if it is offered as part of employment and not to the public generally, the only charge is interest, and that interest is no more than 1% above the highest of specified banks' base rates [8]. Take advice if a third party lends.

**Tax.** Cheap or interest-free loans are exempt only if the aggregate balance of all the employee's cheap loans does not go above £10,000 at any time in the tax year [16][17]. Otherwise the taxable benefit is interest at the official rate, 3.75% from 6 April 2026, less any interest paid [10]. Report it on form P11D and pay Class 1A National Insurance at 15% [9][12]. Written-off loans must always be reported [9].

**Worked example (illustrative, averaging method [11]).** One employee has two interest-free loans, each repaid at £500 a month and outstanding throughout 2026/27.

| | Loan A | Loan B | Combined |
|---|---|---|---|
| Balance at 5 April 2026 | £9,000 | £12,000 | £21,000 |
| Balance at 5 April 2027 | £3,000 | £6,000 | £9,000 |
| Average balance | £6,000 | £9,000 | £15,000 |
| Taxable benefit (average × 3.75%) | £225.00 | £337.50 | £562.50 |
| Employer Class 1A NIC (15%) | — | — | £84.38 |

The £10,000 limit applies to the aggregate of an employee's cheap loans, not loan by loan [17]. Here the combined balance is £21,000, so neither loan is exempt: both are taxable for the whole year, even though Loan A alone never reaches £10,000 and the combined balance falls below £10,000 only at the twelfth repayment.

In the lumi reward benchmark, 19.2% of organisations offer a payroll-deducted loan scheme, 11.3% an internal hardship fund and 7.9% both, all rare. 61.5% answer no (n = 265), the common answer.

**◆ Decision:**
- *Interest-free employer loan:* cheapest for employees. You carry the repayment risk and tax reporting.
- *Third-party payroll lender:* nothing on your balance sheet. Employees pay interest.
- *Hardship fund:* fast help in emergencies. Needs clear criteria, confidential decisions and a tax check on grants.

## Step 6: ◆ Decide on debt advice and financial coaching

**Debt advice.** The Money and Pensions Service (MaPS) runs MoneyHelper, which offers free, confidential debt advice through the Money Adviser Network in England and a Debt Advice Locator Tool elsewhere in the UK. MaPS can give you a custom link that counts visits from your communications [13].

**Tax.** Welfare counselling, including on debt problems, is exempt if available to employees generally. Other financial, tax and legal advice is excluded [14]. Employer-arranged pensions advice is exempt up to £500 per employee per tax year, if conditions are met [15].

In the lumi reward benchmark, 19.6% of organisations fund debt advice or money guidance and 11.3% signpost to a service such as MaPS, both rare. 69.1% answer no (n = 265). For one-to-one financial coaching beyond pensions, 13.6% subsidise it, 12.5% fund advice and 9.5% offer workshops only, all rare. 64.4% answer no (n = 264).

**◆ Decision:**
- *Signpost to MoneyHelper:* free and impartial. Relies on employees taking the first step.
- *Fund a provider:* quicker access and usage data. Check scope and tax.
- *Workshops:* low cost per head. Less help with individual problems.

## Step 7: Set governance and run the deductions check

- **Consent.** Do not deduct unless a statutory provision or the contract authorises it, or the worker has agreed in writing beforehand [5].
- **Minimum wage.** Recovering an advance of wages or a loan does not reduce minimum wage pay. Nor do deductions the worker asks you to pass to a third party, if not connected to the job or for your benefit. Savings held by the employer do reduce it [6]. From 1 April 2026 the rate for workers aged 21 and over is £12.71 an hour [12].
- **Providers.** Check authorisation, data sharing, fees, leaver arrangements and repeat-use alerts.
- **Ownership.** Name an owner and review the programme each year.

**Worked example (illustrative).** A worker aged 21 or over earns £12.90 an hour for 37.5 hours in a weekly pay period: £483.75. The minimum is £476.625 (£12.71 × 37.5).

| Deduction this week | Reduces minimum wage pay? | Minimum wage pay | Result |
|---|---|---|---|
| £40 pay advance recovered | No | £483.75 | Pass |
| £10 to savings held by employer | Yes | £473.75 (£12.63 an hour) | Fails by £2.88 |
| £10 to a credit union | No | £483.75 | Pass |

An employer-held savings deduction could be no more than £7.12 that week. Recheck each April.

## Step 8: Communicate

- Explain costs, deductions and where to get free help.
- Link to MoneyHelper from your intranet [13].
- Remind pay advance users that payday pay will be lower [3].
- Encouraging employees to join a savings scheme could be a financial promotion, which must be made or approved by an authorised person unless exempt [7].

## Step 9: Measure

Set a baseline from Step 1, then track take-up by group, repeat pay advance use, savings balances, loan and hardship requests, MoneyHelper visits and a repeat survey after 12 months.

In the lumi reward benchmark (n = 267, multi-select), 51.7% of organisations track absence rates, 28.8% EAP utilisation and 13.9% wellbeing scores. 31.8% track none of these.

## Checklist

- [ ] Ran an anonymous survey and reported group results only
- [ ] Wrote objectives, scope and measures
- [ ] Recorded each component decision and its trade-offs
- [ ] Checked pay advance fees, alerts and code membership
- [ ] Checked loans against the consumer credit exemption and the combined £10,000 tax limit
- [ ] Obtained written consent before the first deduction
- [ ] Ran the minimum wage check for each pay period
- [ ] Had savings promotions approved by an authorised person
- [ ] Set a baseline and review date

## FAQ

**Is earned wage access regulated by the FCA?**
Not usually. The FCA's view is that an employer's early advance of salary is not credit.

**Do pay advance recoveries reduce minimum wage pay?**
No, recovering an advance of wages does not. The guidance does not mention fees for early access, so take advice if employees pay them through payroll.

**Is an interest-free loan to an employee taxable?**
Only if the combined balance of cheap loans goes above £10,000 at any time in the tax year. The benefit is then interest at the official rate, 3.75% for 2026/27.

**Can we deduct savings from pay?**
Yes, with contractual authority or prior written consent. Savings held by the employer reduce minimum wage pay; savings paid to an independent provider do not.

## Related

- [Wellbeing and financial wellbeing: UK benchmark 2026](/research/wellbeing-financial-wellbeing-2026) — the benchmark findings behind the figures in this guide.
- [How to set up a long service award and recognition scheme within HMRC rules](/guides/how-to-set-up-long-service-recognition-scheme)
- [How to set employer pension contributions above the auto-enrolment minimum](/guides/how-to-set-employer-pension-contributions)
- [How lumi works: methodology](/methodology) — how these figures are collected and calculated.

## Sources

1. lumi reward benchmark, collection window 2026 H1, national figures: [full findings](/research/wellbeing-financial-wellbeing-2026)
2. Financial Conduct Authority, *FCA sets out views on Employer Salary Advance Schemes* (updated 13 August 2026). https://www.fca.org.uk/news/statements/fca-sets-out-views-employer-salary-advance-schemes
3. MoneyHelper, *Salary advance and Earned Wage Access explained* (accessed 20 September 2026). https://www.moneyhelper.org.uk/en/work/employment/salary-advance-and-earned-wage-access-explained
4. HMRC, *PAYE72053: advance of salary, RTI reporting* (updated 25 August 2026). https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye72053
5. legislation.gov.uk, *Employment Rights Act 1996*, section 13. https://www.legislation.gov.uk/ukpga/1996/18/section/13
6. Department for Business and Trade, *Calculating the minimum wage* (updated 6 January 2026). https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage
7. Financial Conduct Authority, *Statement on workplace savings schemes* (27 August 2025). https://www.fca.org.uk/publications/corporate-documents/statement-workplace-savings-schemes
8. legislation.gov.uk, *Financial Services and Markets Act 2000 (Regulated Activities) Order 2001*, article 60G. https://www.legislation.gov.uk/uksi/2001/544/article/60G
9. GOV.UK, *Expenses and benefits: loans provided to employees*. https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees
10. HMRC, *Beneficial loan arrangements: HMRC official rates* (updated 6 March 2026). https://www.gov.uk/government/publications/rates-and-allowances-beneficial-loan-arrangements-hmrc-official-rates/beneficial-loan-arrangements-hmrc-official-rates
11. HMRC, *EIM26215: beneficial loans, averaging method* (updated 11 September 2026). https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim26215
12. HMRC, *Rates and thresholds for employers 2026 to 2027* (updated 1 September 2026). https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
13. Money and Pensions Service, *Signpost your employees to our free, impartial guidance* (accessed 20 September 2026). https://maps.org.uk/en/work-with-us/financial-wellbeing-in-the-workplace/signpost-your-employees-to-our-free-impartial-guidance
14. HMRC, *EIM21845: exemption for welfare counselling* (updated 12 August 2026). https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21845
15. HMRC, *EIM21803: pensions advice* (updated 11 September 2026). https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21803
16. HMRC, *EIM26140: beneficial loans, small loans exemption* (updated 11 September 2026). https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim26140
17. legislation.gov.uk, *Income Tax (Earnings and Pensions) Act 2003*, section 180 (threshold for cheap loans). https://www.legislation.gov.uk/ukpga/2003/1/section/180

*This guide is general information about UK employment law and practice as at the date shown. It is not legal advice. Take advice on your own circumstances.*

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