How it works
Salary sacrifice is an employee-wide benefit that enables ‘non-entitled’ staff to exchange some of their pre-tax salary in return for a company car that is leased through the employer.
Although the employee still has to pay tax in the form of Benefit in Kind on the car, the savings come through reductions in income tax and National Insurance Contributions.
The vehicles are run on a contract hire operating lease and the cost to the employee is typically much lower than if they were to source a brand-new car themselves. This can be further helped by cost efficiencies through our buying power and manufacturer discounts.
The employee also gains from hassle-free motoring like a typical company car driver. Cars are fully maintained and serviced and extra features such as tyres, maintenance, road tax, breakdown cover and insurance are usually included as part of the package.
At the end of the agreement the car is returned with no additional charge, provided it meets the required fair wear and tear standards and in line with the agreed mileage and contract duration.
Benefits to the business include cost savings from only paying Class 1A National Insurance on the employee’s car benefit rather than on their sacrificed salary.
Other benefits to your company include enhanced CSR credentials. As the employee cost savings are greatest with low-emission vehicles, such schemes can reduce your carbon footprint. They can also improve your occupational road risk management by ensuring employees are driving brand-new, fully maintained vehicles.
Finally, giving all staff equal access to a company car is a proven recruitment and retention tool that can significantly enhance your existing benefits package.