Making salary sacrifice work for SME company fleets

Making salary sacrifice work for SME company fleets

Posted by

Martin Brown

August 2021

Salary sacrifice as a method of acquiring vehicles is rising in popularity, as it often does when the taxation environment is beneficial.

And at the moment, it’s particularly beneficial for zero-emission vehicles, with benefit in kind rates from 1% and then rising to just 2% until 2024/25 tax year.

This rise in popularity was reflected in some research I was reading through: it found that 53% of employers were offering salary sacrifice to non-company car drivers compared with just 39% in 2020.

Such salary sacrifice schemes were concentrated, though, in the large companies, featuring more than 500 employees. But there was much less prevalence in smaller firms and SME fleets that we typically deal with.

Which got me and the Fleet Alliance team thinking.

Why can’t we make salary sacrifice available to SME fleets? It should be simple, after all.

Now salary sacrifice is not new, of course, and there are plenty of fleet and leasing companies that offer such a facility, but all for larger enterprises. So we’ve just launched our own salary sacrifice arrangement and made it SME-focused, so smaller firms can benefit from its advantages and help more people make the move into zero-emission cars.

Simply put, you sacrifice part of your gross salary for a car, before paying the income tax due on a zero-emission vehicle. Against traditional personal leases, it saves a remarkable amount of money. A Volkswagen ID.3 costs £365 net on our salary sacrifice scheme, whereas the same vehicle on a personal lease costs £566.

Clearly, that’s value.

But where there’s deeper value is in the ability to convert some of your grey fleet drivers – those who drive their own vehicles occasionally on business trips – and put them in a brand new car with a full maintenance package that is fleet-managed.

Not only are your drivers in a better car, but you are reducing – as an employer – your duty of care risks because you know that the vehicle is fully maintained. And has the correct insurance. It goes without saying that there are serious CSR advantages too.

If you run an SME then talk to us about how salary sacrifice can be introduced to your business. And if you want more information, then just hop over to this page where we have more detailed information.

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