Salary Sacrifice Cars
A salary sacrifice car scheme is an attractive method of delivering a tax efficient benefit to employees, at little or no cost to your business.
Salary sacrifice car schemes benefit both your employees and your business
How does salary sacrifice work?
A salary sacrifice scheme is possibly the most advantageous way to offer company cars, for both employer and employee.
Salary sacrifice works best for fully electric cars as they offer particularly impressive BiK savings. You lease a zero-emission company car on corporate terms and your employee sacrifices from gross salary to pay for the lease, including insurance, which generates monthly NIC savings for you. As a result, you both save money.
Salary sacrifice helps reduce your carbon footprint whilst offering a valuable benefit that is available to all employees thereby increasing engagement, motivation and retention. It also reduces the risk inherent in grey fleet as all vehicles driven on company business will be reliable and fully maintained.
A salary sacrifice car scheme enables an employee to drive a brand new, cost-effective electric car through their employer for a great deal less than if they had leased it privately.
The employer leases a tax-efficient zero-emission electric car, which it provides to the employee as a company car in return for the salary sacrifice.
As sizeable VAT savings may also be available, the employee can access green, zero-emission cars at a fraction of their normal cost, and employers also benefit from potentially significant monthly NIC savings.
And for employers who operate a grey fleet, because increasing company car tax on traditional petrol and diesel cars has encouraged drivers to take the cash alternative, a salary sacrifice scheme is an ideal way to reduce Duty of Care risk and reduce your company’s carbon footprint.
- An attractive employee benefit without increased costs
- Not restricted to just larger fleets
- Compared to sole supply, our multi-bid funding solution significantly reduces costs
- Generates monthly NIC savings
- Electric vehicles help reduce fuel reclaim costs
- Encourage cash allowance takers back into company cars
- Reliable and fully maintained cars reduce the risk inherent in grey fleet
- Helps reduce your carbon footprint
- A valuable benefit that is available to all employees
- Increases employee engagement, motivation and retention
A salary sacrifice car scheme enables you to drive a brand new, cost-effective electric car for a great deal less than if you had leased it privately. Your employer leases a tax-efficient zero-emission electric car, which it provides to you as a company car in return for the salary sacrifice.
As the cost of the car is deducted from your gross salary, income tax and National Insurance Contributions are based on the lower, revised salary, thus reducing the income tax and NIC you pay each month.
In addition, because your employer may be able to recover the VAT on the rental and maintenance costs it pays, which you can’t recover if you personally lease a car, you may be able to enjoy even greater savings.
- Our multi-bid solution further reduces the cost to your employees
- Access to a brand new car at a fraction of their normal cost
- Significant income tax, NIC and VAT savings
- No up-front costs or credit checks
- Reduced fuel costs
- Flexible mileage and terms to suit the employee
- Maintenance and breakdown cover included
- Fully comprehensive insurance provided
- Employees enjoy the experience of driving a green, zero-emission vehicle
- Employees contribute to a cleaner environment for themselves and their families
Frequently Asked Questions
We have assembled a list of common questions that outline the benefits of participating in the Scheme, how it works in practice and aspects you should be aware of.
Why Fleet Alliance?
We work closely with employers leveraging our experience with scheme modelling, structure, and policy, combined with our multi-bid funding solution, to deliver cost-effective salary sacrifice solutions that are attractive and easy to manage for both employers and employees.
- Our flexible scheme offers a solution for fleets of all sizes
- Compared to sole supply, our multi-bid funding solution delivers significant savings to you and your drivers
- Flexibility to choose the lifestyle risks you wish to mitigate against, further reducing costs
- Our salary sacrifice solutions are simple, flexible and robust
- Free unbiased consultation using our market-leading cost-benefit analysis software
- Easy to manage using our cloud-based fleet management solution
- Our award-winning fleet management tools ensure administration is easy
- Independent and impartial expertise from a multi award-winning fleet management provider
Salary sacrifice calculator
We also provide exclusive access to our easy-to-use online salary sacrifice calculator that helps demonstrate the potentially significant savings available to employees and employers.
Salary sacrifice and electric cars
Electric cars are exempt from the Optional Remuneration Arrangements (“OpRA”) legislation, which ordinarily restricts the tax and NIC savings available via salary sacrifice. Therefore, salary sacrifice is particularly effective for fully electric cars as the BIK tax rate for these cars is just 1% in 2021/22 and is capped at only 2% until the end of the 2024/25 tax year.
Changes in National Insurance and salary sacrifice
Salary sacrifice schemes based around electric vehicles are likely to become more attractive to companies following the Government’s announcement of a National Insurance levy of 1.25% that is due to be introduced from April 2022/25. While the increase will affect both employers and employees, the impact of the rise will be mitigated for drivers on EV salary sacrifice schemes.
Is a salary sacrifice car scheme right for your business?
Except in very limited circumstances, salary sacrifice is not intended to be a direct replacement for the company car scheme. But, for employers wishing to enhance the benefits offered to all staff, or attract employees who have opted for a cash allowance back to the company car to tackle the duty of care risks inherent in their grey fleet, salary sacrifice is an attractive solution that complements an existing company car scheme.
We have the expertise to help employers fully appraise their fleet; looking at eligible employees, staff turnover, and other key factors.
We offer a free consultation, using our market-leading cost-benefit analysis software, to provide an unbiased recommendation regarding the decision an employee or employer should make.
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