What is a Salary Sacrifice Car Scheme?
A salary sacrifice car scheme allows employees to unlock the door to a brand-new car without the worry of a hefty price tag or the maze of maintenance costs. Imagine cruising in a fresh-off-the-lot vehicle with servicing, tyres, maintenance, insurance, and more bundled into a neat monthly package.
This setup results in valuable tax and National Insurance savings and offers a simple path to driving a new car. And say goodbye to hefty upfront costs typically associated with buying or leasing, our scheme has no deposits or hidden fees!
The Evolution of Salary Sacrifice Car Schemes
Since its birth, salary sacrifice car schemes have undergone significant changes, especially following the tax adjustments in April 2017. These changes introduced income tax on the benefits received through such schemes, altering the landscape.
Despite this, the core appeal of salary sacrifice car schemes has remained intact; simpler motoring for less. The only thing you need to worry about is the Benefit-in-Kind tax, which is locked in at just 2% for electric vehicles until 2025! This is because the BIK is based on the CO2 of the car. So, the greener the car, the more savings! If you opted for a hybrid car on the scheme, you would make small savings, but the savings essentially vanish if you’re after a hefty polluting vehicle.
The Evolution of Salary Sacrifice Car Schemes
Since its birth, salary sacrifice car schemes have undergone significant changes, especially following the tax adjustments in April 2017. These changes introduced income tax on the benefits received through such schemes, altering the landscape.
Despite this, the core appeal of salary sacrifice car schemes has remained intact; simpler motoring for less. The only thing you need to worry about is the Benefit-in-Kind tax, which is locked in at just 2% for electric vehicles until 2025! This is because the BIK is based on the CO2 of the car. So, the greener the car, the more savings! If you opted for a hybrid car on the scheme, you would make small savings, but the savings essentially vanish if you’re after a hefty polluting vehicle.
Benefits of Salary Sacrifice Car Schemes
For employees, salary sacrifice schemes are a treasure trove of savings and selection, offering a lineup of top-notch cars. Wrapped in all-inclusive packages, these deals cover insurance, maintenance, and more, delivering a stress-free experience. If you’re stuck for choice, let our Driverline team know your needs and they can find the perfect car to suit you.
For Employees:
- Significant Tax and National Insurance Savings: Employees enjoy reduced tax and National Insurance payments as deductions are made pre-tax, increasing their disposable income.
- Access to Premium Vehicles: This scheme gives you access to newer, safer, and more technologically advanced vehicles, improving your quality of life and safety on the road.
- All-Inclusive Packages: Maintenance, insurance, and even charge points (if you desire) can be bundled into your package, simplifying vehicle management and providing peace of mind.
- Positive Environmental Impact: Opting for ultra-low emissions vehicles (ULEVs) under this scheme significantly lowers carbon emissions, contributing to a healthier planet.
- Improved Cash Flow: With no upfront deposits or hidden costs, employees can handle their money more easily and enjoy immediate savings.
Are you an employee looking to go electric? Head over to our quote engine, get your login, and start browsing! It’s really that simple.
For Employers
Employers, in turn, find in these schemes a golden key to boosting employee satisfaction and fostering a happier, more motivated workforce. As well, the scheme promotes a greener corporate footprint through greening their fleet and reducing their company-wide emissions.
- Enhanced Employee Satisfaction and Retention: The scheme proves your company’s investment in its workforce, promoting loyalty and happiness.
- Reduced Fleet Costs and Administrative Burdens: Free implementation and outsourced fleet management = no cost and minimal admin for you!
- Corporate Social Responsibility (CSR): Promoting ULEVs helps achieve sustainability goals, enhancing the company’s environmental reputation and commitment to a greener future.
- NI Advantages for All: Reclaim 15% of your employer’s National Insurance and hand the rest to the employee; they’re happy, you’re happy!
- Attractive Recruitment Perk: A competitive edge in talent acquisition, the scheme enhances the employer value proposition by offering a sought-after benefit.
Delving Deeper into Salary Sacrifice Car Scheme Benefits
Taxation and Salary Sacrifice Car Schemes
Understanding the BIK tax is critical. The tax you pay on the vehicle is influenced by its environmental impact. The HMRC website offers resources for navigating these considerations, ensuring employees and employers can make informed decisions. However, this will be built in and clearly outlined in your quote.
Choosing the Right Car: ULEVs and Tax Advantages
Selecting a ULEV not only supports environmental goals but also maximises the financial benefits of the scheme due to lower BIK rates. This choice underscores the financial and ecological advantages of participating in the scheme.
How Much Can I Salary Sacrifice for a Car?
The amount you can sacrifice is flexible, provided your remaining salary meets legal minimum wage requirements, ensuring both compliance and advantage from the scheme’s benefits.
Are Salary Sacrifice Schemes Worth it?
Absolutely. With the potential for significant savings on National Insurance, access to a broader range of vehicles, and comprehensive car management packages, these schemes present a compelling option for managing personal transportation needs.
Is a Salary Sacrifice Car a Taxable Benefit?
While the car is a taxable benefit, the scheme’s structure allows for overall savings through reduced tax and National Insurance contributions, making it a financially beneficial arrangement for many.