What to Look for in a Salary Sacrifice Car Scheme?

As interest in electric vehicles soars, more and more companies are looking at car salary sacrifice as an addition to their benefits proposition; hey, why not! Electric cars are amazing, though they can be expensive. Did you know, through salary sacrifice they are obtainable for less than the cost of running a 5-year-old diesel car? Salary sacrifice brings amazing electric cars within the budget of most of us! However, as interest soars, so do the various solutions, so what should you look out for in a salary sacrifice car scheme?

HMRC Compliance.

Firstly, you have to look for an HMRC compliant scheme. It’s not enough for a supplier to say they offer a salary sacrifice scheme; do they actually understand what is required by HMRC? Will they back this up by submitting the scheme to HMRC for you? For free? If not, you should query why. HMRC define schemes as, “governed by employment law but do demand a formal non-flexible arrangement”. This means that you can’t offer a compliant scheme unless the employee is tied in for 12 months or more and you have to document the change in terms and conditions. Look for a supplier who will handle the contract variation for you.

First Beware – Non-Compliant Time Frames.

Any scheme for less than 12 months will not be compliant. There are also limitations on the type of motor insurance you can take and how the agreement should be structured. Engage with an inexperienced supplier and you could end up falling foul of an audit with back taxes due from employee and employer…

Second Beware – Hidden Admin.

Company cars are an admin headache, salary sacrifice cars shouldn’t be. We’ve already mentioned insurance and contract variations but beware of other concerns. For example, it could be the plethora of parking and speeding fines that could darken your desk and make payroll admin a headache if they come to you. You should also look for a supplier who will handle the employee engagement piece of the pie.

Risk Management.

Lastly, a well-structured salary sacrifice scheme should have very little risk to you. Too many expose you to leaver risk or being out of pocket should a colleague fall below living wage due to maternity or sickness. Look for a supplier who protects you from both day one. After all, electric cars are very popular and lead times can be many months. Who knows what changes could happen over this time? The bottom line is, neither you nor the colleague should be too exposed.

Salary sacrifice car schemes are amazing when combined with electric cars. There is a reason why so few suppliers historically offered them. Schemes should be complex for the supplier only, not for you. A little due diligence to ensure you’re protected in all these areas should mean a simple implementation for you and your team that will fly through any HMRC audit and vastly increase the take-up of electric cars!

Want to have a look at some electric cars available with our scheme? Get the free guide below!