Looking for a new car is stressful, especially when thinking of how it can be funded. Under a salary sacrifice scheme a new can be achieved with minimal cost and disruption. We look at the five things that are essential to know about when considering signing up for a salary sacrifice scheme.
Benefits to employers
A salary sacrifice scheme tends to come at little or no cost to an employer, providing an extra tax-effective benefit for employees. Such schemes also allow employers to save on National Insurance Contributions on the cleanest cars with no leaver risk under certain schemes.
There are also a number of environmental and health and safety benefits to the scheme. Under the offering, new cars will be supplied which means the ‘green’ credentials are likely to be bigger, offering a more economically responsible vehicle. Such cars will also be insured and maintained for business use under the contract, a concern of ‘grey fleets’.
Benefits for employees
There is a myriad of benefits for employees that may not normally be available. With the scheme employees can find themselves with a brand, new affordable car that is fully maintained by the employer. All an employee has to do is fill it with fuel.
The money saving scheme also gives drivers the peace of mind that will not experience unexpected breakdowns or servicing costs. There is also no deposit or credit check required and with the fixed monthly payments coming from salary, employees don’t have to remember dates.
What is included?
Targeted to meet each individual’s needs, Salary Sacrifice schemes typically include various things.
The finance of the vehicle itself as well as its general maintenance including services is covered. Drivers are also offered a fully comprehensive insurance. With roadside assistance and accidental management services available – employees can benefit from sacrificing a small amount of their monthly salary.
What should be considered?
The scheme cannot take an employees salary below the National Minimum Wage. Working best with low CO2 emission vehicles, salary sacrifice schemes are subjected to insurer’s acceptance as well as terms and conditions.
Each vehicle is treated as a taxable benefit by HMRC for an employee, based on the car’s list price and the emissions of the particular vehicle.