Employees of your organisation can now benefit from the rewards of driving a brand-new, well maintained and managed, company car.
The salary sacrifice scheme provides all of the benefits of a company car, by saving people both money and stress. The difference being that a proportion of their salary will be sacrificed and deducted as a monthly retainer.
But the cost of the actual vehicle is deducted from the persons gross salary, preventing them from making unnecessary tax and national insurance contributions.The employer also benefits by paying a lower amount of National Insurance and Corporation Tax.
The inclination for companies to replace their entire company car scheme with salary sacrifice schemes is ever increasing. However, salary sacrifice schemes are ultimately seen as a HR benefit for the entire workforce.
The scheme has been structured in a manner so that employees could pay much less than they would do elsewhere, and is an ideal way to increase employee benefits and satisfaction.
Its not juststaff that can enjoy the benefits of the scheme, your business can to; with higher levels of staff motivation, retention and money saving. The scheme could be especially beneficial when hiring new employees a brand new car is the perfect incentive for someone to want to work for you.
Business can also take advantage of newer, more fuel-efficient cars which offer additional benefits (the tax and NI savings dwarf the amount of company car tax payable) and also can help improve your business environmental credentials.
The salary sacrifice scheme can also be used to encourage employees to take advantage of low emission vehicles. Especially since more environmentally-friendly vehicles attract the lowest rate of Benefit-in-Kind tax.
Salary sacrifice schemes can also help to address grey fleet issues within companies. Typically, grey fleet vehicles are those that are employee owned and used for work related journeys. Grey fleet vehicles can include privately owned vehicles, cars obtained via an employee car ownership scheme, cash-for-cars or a vehicle that the employee has hired outside of any company-provided scheme.
But employers must be careful with employee contracts because they may require amending to allow for the salary sacrifice schemes. They will also need to cover all potential risks such as early contract terminations and maternity leave costs. Plus, the salary sacrifice scheme could prove to be very expensive for businesses if tax rules are suddenly altered.
Companies should also look to have a strategic internal marketing plan in place to ensure that this is seen as an attractive option by employers. Else the scheme could result in few acceptances.
Employee circumstances can change overnight, meaning that it is vital to have carefully planned contingency measures in place.
The majority of car leasing brokers are already offering salary sacrifice schemes or will be launching such schemes in the coming months. These companies will work with you todevelop the right policy to meet your aims and objectives, and provide on-going support throughout the implementation and management stages.