Are Salary Sacrifice Schemes Worth It
Are salary sacrifice schemes worth it? Well, salary sacrifice car schemes are often thought to be beneficial both to the employer and the employee. The benefits to the employee include substantial savings on tax and national insurance contributions. In this piece, we are going to take a look at the pros and cons of electric car schemes to help you decide if they are the right choice for you.
What is a Salary Sacrifice Scheme?
A salary sacrifice scheme is a way for an employer to give their employees a salary and benefits package that reduces the amount of income tax and national insurance contributions paid. To do this, there needs to be a reduction in salary, as well as an increase in other benefits, such as pensions or company cars.
Employees will pay less income tax as the salary sacrifice amount is deducted from their taxable income; as well, they pay less National Insurance as they are being paid via another form of remuneration. Some schemes may be entirely tax-free for employees.
Benefits of a Salary Sacrifice Schemes
The benefits of salary sacrifice schemes are clear for both employers and employees. Here are a few of them of the main benefits:
Better Cars for a Lower Price
From a company’s point of view, the most obvious benefit is the savings they make on the price of the car. They will have to pay less for each vehicle as there is less salary being paid to employees. In return, they get a newer more expensive car. This also allows them to get better cars than they could afford if they had paid the going rate for a vehicle.
The employees also gain by being able to afford brand new vehicles for low monthly costs. Did you know that you can run an electric car for less than the cost of running a 5-year-old diesel car? Another benefit for the employee is that, through our scheme, your salary sacrifice vehicle is fully maintained, eroding your worries about the upkeep of your car!
No Deposit Required
With these schemes, you also don’t have any large up-front payments. With lease offers and other frequent schemes that people use to get new vehicles, these work schemes avoid huge deposits and initial payments for the employer by them taking a slightly lower salary; however, this also means they pay less tax and national insurance contributions. Once the salary sacrifice contributions begin, the car is theirs!
Lower Income Tax and National Insurance Contributions
This is a huge benefit for the employee. They take a lower gross salary but save on tax and NI contributions. To some degree, they are just shifting some of their tax payments towards a car instead. Obviously, this all depends on how much their salary is, the employee contributions, etc. However, a salary sacrifice arrangement is a great way to save money on national insurance contributions and tax payments.
Valuable Retention, Engagement, and Motivational Tool
Offering salary sacrifice and other schemes shows the employer that you are worth working for. It shows that you offer more than a paycheck. This means you could be a more favourable option to work for over the competition. Benefits can sway an employee to stay with a company even if it offers a lower salary than other companies. These benefits can include non-cash benefits, childcare vouchers, and pension benefits, among others.
Help the Environment and Improve your Green Credentials
Ultra-low emission cars are offered on these schemes, which is a great reason to do them for employees and employers. Employers can have a greener company and employees can make a huge lifestyle change! Step away from fuel and the ever-growing prices of petrol and combat air pollution at the same time, win-win.
Electric cars can be pretty pricey, but salary sacrifice arrangements make them affordable and save you money on tax and national insurance contributions payable on your monthly payments.
Little or No Additional Administration to your Company
One of the best things about salary sacrifice schemes is that they are easy to manage. Employees still have to go through all the same processes as if they were buying or leasing a car normally. The only difference is that, instead of paying for it themselves, they are getting their monthly costs paid by their employer. This may involve some slight additional paperwork involved to keep track of all the costs involved, but this is minimal.
The Downside to Salary Sacrifice Car Schemes
The downside is obviously finding a provider that suits your needs, which can take time and resources. However, there are many providers that offer great customer service, a good selection of cars, and good benefits and prices. Here at Fleet Evolution, we offer all that, and we champion electric cars as part of our salary sacrifice schemes. Chat to us today to discuss how we can offer you more than the other providers!
Benefits of Electric Vehicles
Salary sacrifice cars give employees the option to have brand new vehicles, and such arrangements mean electric vehicles are affordable as a result. This way, both you and the employee benefit by having a greener workforce and having your employees save money on their fuel costs. Hence, they have a lower take-home pay but they save money on NI contributions, tax payments, and now fuel as well. What’s more? If employees know their car is due for a service or MOT, it will be less stressful for them to arrange it as we do this for them! That way, their efforts are focused entirely on work and not on their car!
Is Salary Sacrifice Worth it?
On top of cars, you can have other salary sacrifice scheme agreements. From a salary sacrifice pension scheme to other earnings-related benefits, which highlights how beneficial salary sacrifice is for employee benefits. It is a tax-efficient method that needs no additional contributions and the employer makes no payments; it simply requires a slight deduction from take-home pay. For this reason, it is completely worth it.
How to Set Up a Salary Sacrifice Scheme?
Salary sacrifice arrangements are nice and easy to set up, you just need to find the right provider. Here at Fleet Evolution, we offer salary sacrifice deduction schemes on some of the best available cars currently on the market.
So, if you want your employees to have a better tax year, a brand new car for less money, then set up your scheme today as we can provide advice on the best deal for you. If you want to take this scheme to your employer, get in touch below and we’ll send them a guide with everything they need to know!
Tags : electric car, electric vehicles, Employee Benefits, quote engine, Salary Sacrifice, ULEV, ultra-low emission vehicle