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Salary Sacrifice Cars - How Do They Work?

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  • What Are Salary Sacrifice Schemes?

What Is A Salary Sacrifice Car Scheme?

A salary sacrifice car is a vehicle leased through a third-party supplier in partnership with your employer. Its cost is deducted from your salary monthly, pre-tax.

Similar to a cycle to work schemes and and childcare vouchers.

This gives employees access to lots of different savings by leveraging our business discounts and the savings on tax and NI that come with it.

For more information on salary sacrifice, why not look through our helpful all in one guide on salary sacrifice or to talk through the scheme with one of our engagement team fill out the ‘Download a Guide’ form below and select request a call or give us a call on 0300 302 0626 and we’ll be happy to help.

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Perfect for HR & those responsible for Employee benefits, Company cars or Green initiatives

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Perfect for employees looking to move into a brand new car for less

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Benefits to Salary Sacrifice Schemes!

Benefits For Employees Of A Salary Sacrifice Scheme

The idea behind salary sacrifice is a simple one; you give up part of your salary and, in return, your employer gives you non-cash benefits such as a car.

You save on income tax and National Insurance contributions (NIC) when you buy a car through your employer.

You save money because part of your salary is used to pay for the car every month, rather than paying large upfront costs. Therefore, it is one of the best options for having a new car for employees of companies that offer the salary sacrifice scheme.

Benefits For The Employer Of A Car Salary Sacrifice Scheme

The main advantage to employers for implementing salary sacrifice car schemes are the savings they make in National Insurance Contributions (NICs).

As an employer, you pay NIC contributions on employees’ salaries but benefits such as car salary sacrifice schemes or pension contributions are exempt.

Benefits For The Environment With Electric Car Salary Sacrifice

We all know that green cars are better for the environment but how much greener are they really?

As the owner of an electric vehicle, you will be less dependent on fossil fuels. Your transportation will also be emitting 30% less carbon dioxide.

Recharging an electric car will not add a significant amount to your energy bills. In fact, you will be spending around the same amount you would if you had 4 plasma TVs in your home, running 24/7.

Electric cars help you to make the most out of a salary sacrifice scheme. With a brand new car that gives you tax benefits and helps you to save money on fuel costs as electric cars can be charged in many locations for free and avoid the use of petrol.

Getting An Electric Vehicle With A Salary Sacrifice Scheme

Companies like ourselves at Fleet Evolution actively encourage the use of Electric vehicles within Salary Sacrifice Schemes. It is more cost-effective to buy an electric vehicle this way because you will be saving on the whole price of the car, not just some of it.

Transferring your company cars to electric vehicles will help improve the environment and reduce your carbon footprint. It will also make you a role model for other companies to follow in terms of environmental awareness.

How Do They Save You Money On Income Tax

A salary sacrifice scheme saves you money on your income tax as the amount of tax you pay is linked to your salary. The higher your salary, the more tax you pay!

If you save some of your income with a car scheme, the amount of tax that needs to be paid will be reduced accordingly. By exchanging part of your salary for an Electric Vehicle through our business schemes, you save not only money but also protect the environment too.

How do they save you money on National Insurance Contributions (NICs)

Employers pay NICs for every salary they give to staff, so any benefits given to an employee are exempt from these payments. This means that if an employer pays for a staff cost, such as a car under salary sacrifice, no NICs will be due on the benefit.

Benefits Of Electric Vehicle Salary Sacrifice Schemes

Petrol or diesel costs money, but with an electric vehicle, you don’t need fuel bills. The only maintenance required is for the brakes and tyres, which you will find on any car anyway. You can find a ton of free charging points and with a hybrid car, whilst it still has petrol, you can travel much further distances whilst still lowering the use of emissions and fossil fuels.

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Charging Your EV Guide

Charging can be a tricky topic to tackle - that's why we've made this guide going through everything you need to know!

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Frequently Asked Questions

What happens if an employee leaves?

If an employee leaves then you do not have to continue with payments for the car. However, we will offer the car to the employee under a more standard lease option or to outwardly pay for the vehicle. So, as an employee, you can always have the option of car ownership regardless of if you stay with the company in question or not. Hence, it is a good system to buy a brand new vehicle even if you are worried about the company commitment.






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What Cars Are Available On Salary Sacrifice?

Through Salary Sacrifice you can find a lot of brand new cars for amazing prices. However, you gain the most when choosing ultra low emission vehicles. Providing salary sacrifice schemes for a company car has many benefits, but the option of having new electric vehicles is by far the most impressive.






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What Are The Disadvantages To Salary Sacrifice Cars?

The obvious downside is that you sacrifice part of your salary; however, considering most people now take out financial plans such as leases or loans to cover the cost of cars, none offer the same benefits that this scheme does. Through a salary sacrifice, you can pay less tax, avoid upfront costs, and have access to a range of amazing cars and fully electric vehicles.

For companies, it is a great way to offer a company car, encourage your staff to transition to electric cars, and help you to retain employees.






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Is A Salary Sacrifice Car Scheme Worth It?

If you want a better car that offers tax benefits and avoids any big upfront payments, then this is the best option. It is great for helping you budget and it lowers your income tax. Not many schemes offer benefits such as this.






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Do You Own The Car At The End Of Salary Sacrifice?

You can choose to buy the car once your term is over, however, you also have the option to pass the car back. From there, you can either take on a new salary sacrifice vehicle or move away from the scheme. Have a talk with us today to find out how the specifics work and how you can benefit the most from a Salary Sacrifice scheme.






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