About Salary Sacrifice

About Salary Sacrifice

Posted by

Susan Graham

August 2019

A salary sacrifice scheme allows your employees to give up a portion of their salary in return for a non-cash benefit such as a car. Salary sacrifice can provide employees with a cost-effective means of financing a vehicle by reducing their cash pay in return for a Benefit in Kind (BiK).

Fleet Alliance can act as a designated salary sacrifice provider and assist you in establishing a salary sacrifice scheme within your business.

So what are the benefits of salary sacrifice?
  • A company benefit that may help to attract and retain staff
  • More favourable to an eco-friendly fleet. No tax is paid by employees on ULEV vehicles.
  • Easy to implement and put into practice as Fleet Alliance can facilitate the management of this.
And what are the potential risks you face?
  • Any salary sacrifice agreements entered into on or after 6th April 2017 will be subject to new governing measures. Employee income tax and employer national insurance contributions will be based on the higher of the gross amount of salary being sacrificed or the value of the BiK provided. ULEV’s and salary sacrifice arrangements entered into before 6th April 2017 are not affected by the changes.
  • Education of staff required to ensure they engage with the scheme
  • May negatively affect individual employee’s maternity pay, mortgage applications, life cover or other contributions.
  • Not a viable option for employees on maternity leave or other forms of absenteeism as the employee pay is reduced, but the salary sacrifice contribution does not change.

The potential benefits and risks of a salary sacrifice scheme are largely dependent on your individual business and the number of employees you have. Contact Fleet Alliance directly to find out whether salary sacrifice is a viable option for your business.

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