How do Employee Car Schemes Work?
Do you want to attract and retain the best employees?
Did you know that over half of all employees seeking a new job rate benefits and package as the
most important factor they look for!
Do you want to increase productivity?
Distractions such as car failures and financial stress can have a major impact on employee
Would you consider a company vehicle to be one of the most prestigious benefits?
In surveys employees consistently rate company provided cars as one of the top five
Interested in providing benefits at no cost and virtually no risk to you?
You should be, here’s what you need to know!
What type of car schemes are available?
One scheme seldom suits all, we channel employees into the correct scheme for them, our flagship scheme is salary sacrifice which generally suits 80% of employees but we also have 'carfinnity' for lower paid and contractors, and employee car ownership schemes for those doing high levels of business mileage. To learn more about our other car schemes download our guide here, or if you want to learn more about salary sacrifice read on!
How does salary sacrifice work?
Effectively an employee sacrifices part of their gross salary in exchange for a benefit, so their package changes. The sacrificed salary means the deduction benefits from tax and NI savings, the employer also benefits from a saving in NI and corporation tax. The benefit provided however may be taxable which erodes the saving, meaning low Co2 cars could be as much as 45% cheaper than a personal alternative.
Who can benefit?
Any employee earning over £20,000 per annum will usually benefit significantly providing a ULEV (sub 75 co2) car is chosen. Savings can be made on more polluting vehicles but these will not be as substantial, a typical car emitting 100 CO2 will generally work out around 20% cheaper than retail.
What are the potential savings?
With a correctly set up scheme the employee should save roughly 30% compared to leasing direct and the employer saves on NI on the cleanest cars. All schemes are set up slightly differently so savings can be greater for either party. In addition there are indirect savings arising from improvements in retention and productivity as we manage every motoring need your employee has.
What type of company would benefit from salary sacrifice cars?
As a general guide any business that has good staff retention with the majority of eligible employees earning above £20,000 would benefit from a salary sacrifice car scheme. You do not need to offer the benefit to all employees and initially, the scheme may be introduced across as narrow a selection of employees as you wish.
How can I learn more?
Contact us today to start the process, we'd love to work with you and setting and running up a scheme costs the employer absolutely nothing!