Salary sacrifice car schemes are a popular choice for many companies as a way to offer additional benefits to employees, whether they require a car for work or not. They’re often used as an initiative to attract and retain staff.
The salary sacrifice is simply an arrangement where an employee gives up part of their salary in return for a non-cash benefit. They usually offer health care, gym memberships, pensions, and childcare or, in this case, a new car. Here, leading fleet insurance broker Bluedrop Services highlight the increased benefits of salary sacrifice car schemes.
Why you should offer a salary sacrifice car scheme
Whether you require your staff to drive for work or whether it’s a perk of the job, salary sacrifice car schemes are becoming increasingly popular, especially since the lockdown due to coronavirus.
As a way to contain coronavirus, more people are relying on personal vehicles as opposed to public transport to get them to work or run every day errands.
Offering a salary sacrifice scheme will mean that your staff have the means to travel to and from, or even for work related activities. Keeping staff away from public transport that could likely expose them to the virus.
Other than the above benefits, these are some additional benefits that can benefit both you as an employer and your employees.
The increased benefits of salary sacrifice car schemes:
Can provide tax benefits
If carefully planned and managed, a company car scheme can help cut employer national insurance contributions (NICs) and allow you to claim capital on allowances that reduce taxable profits.
Although some of the tax benefits have changed since 2017, you can still benefit from a form of reduced tax by offering environmentally friendly cars to your employees. This not only shows you are taking responsibility as an employer but also helps your employees to save a bit of money from their company vehicles.
A salary sacrifice scheme is a controllable reward system that does not increase the wage and pension bill.
Fully expensed package provided with the car
As a company, you will be responsible for the maintenance, MOT’s, servicing and tax for the vehicle. This will be an added bonus for your employees, especially as fleet vehicle insurance is usually included too.
This is a massive cost saving benefit for your employees and will therefore mean they have a healthy vehicle that is maintained and can safely get to and from work.
Enjoy a better car for your employees at a lower price
Usually, businesses have the option to acquire cars for a lower price than to buy off of a forecourt. This makes it much cheaper for your employees to benefit from a new car at a lower cost, and although the business usually pays for the upkeep of the vehicle, newer cars are at a lower risk of needing repair work.
Retention and engagement tool
Offering cars as a part of your salary sacrifice scheme will help to improve employee retention and engagement at your business. As a generous scheme, that can be available to all employees, it will help them to feel valued and appreciated by offering them such benefits.
Using eclectic vehicles (EV) can help the environment and reduce tax
From April this year, a change in legislation came into place that now means that EVs now have zero benefit-in-kind (BiK) tax. This means that there are significant savings for employees, including savings from lower National Insurance contributions for the employer.
Enhanced corporate responsibility
It is your corporate responsibility to ensure that you lower your CO2 emissions as a business. By choosing electric vehicles as part of your fleet this will help to ensure you’re playing your part in bettering the environment.
Moving to a more environmentally friendly vehicle can not only reduce your company’s footprint but will also help to save you money on a salary sacrifice car scheme.
Offering a car scheme also helps to reduce your “grey fleet” risks, which can become costly, especially as a lot of employers will tend to opt for cheaper to run vehicles that are prone to breakdowns and maintenance repairs.
Are salary sacrifices for vehicles still worth it?
Although the tax benefits for salary sacrifice has changed over the years, it is still a viable option for employers to offer to employees, especially if offering electric vehicles. And with more employees relying on their own transportation, it may be worth considering as an option to help retain your existing staff but also attract new ones, whilst actively trying to reduce your company’s carbon footprint.