Salary Sacrifice cars,good sense for employee, employer and the environment so why so slow on the uptake?

April 2012

Salary Sacrifice is an essential part of the modern employers benefit package, used to fund everything from childcare vouchers to bicycles, however few companies are combining this extremely tax efficient funding method to one of the most desirable benefits, company cars.

The reasons? We well asked some Fleet Evolution customers and these are top 5 misconceptions about such schemes;

1)     Not aware that company cars can be funded by salary sacrifice

There are still many employers that are simply unaware such schemes exist especially in smaller companies where the HR manager has responsibility for other areas. Generally salary sacrifice cars do not appear as part of the standard portfolio of many flexible benefit suppliers as it’s quite a specialised area.

2)     Complexity of introducing such schemes

This is perhaps the most disappointing reason for not looking at salary sacrifice cars as many suppliers actually play up the complexities of such schemes to prevent new entrants to the market, this is doubly frustrating as the same suppliers will sometimes charge significant set up fees to implement schemes in smaller companies. In reality salary sacrifice is complex but it is equally complex for other benefits unless an experienced partner is sought.  The complexity should

not be a barrier to introduction as it is the suppliers burden to meet.

3)     The financial risk

Of course the costs involved in a salary sacrifice car scheme are significantly higher than some other salary sacrifice arrangements, it is a company car but well-structured schemes are cost neutral and low risk with measures to protect the employer and employee such as termination insurance and risk management. The financial reward of better talent recruitment and retention in itself should outweigh any risk, this is before we consider the employers NI savings.

4)      Size of company

Much has been written about salary sacrifice car schemes not working for smaller employers however in our experience take up and satisfaction are much higher. Using a leasing company any company can obtain significant discounts on vehicles and with more manufacturers becoming interested in the salary sacrifice market the potential savings are likely to increase. Of course admin can be cumbersome which is why you should always use a specialist to administer the scheme for you.

5)      Take up rate

Some sacrifice arrangements and indeed salary sacrifice cars can have reportedly low take up rates but with a proactive approach 10% of employees can be expected to take advantage of such schemes in the first year. Indeed we typically see take up increase across all benefits when a salary sacrifice car scheme is implemented.

Of course there are many companies for whom salary sacrifice cars would be entirely unsuitable but make sure you make an informed choice. If you have high retention and employees earning above minimum wage salary sacrifice cars could work for you.

Survey compiled between March 2012 and April 2012, 150 businesses employing between 50 – 1,000 employees were contacted. Fleet Evolution are car salary sacrifice experts, for more information visit

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