12 April 2022
6 Reasons Why Every Employer Should Consider A Salary Sacrifice Scheme
Electric vehicles (EVs) are fast becoming the biggest revolution to hit the car market in over a century. Sales of EVs overtook diesel vehicles in the UK for the first time in 2021, and the gradual switch over from traditionally-fuelled cars to EVs is inevitable and unstoppable.
A salary sacrifice car scheme is a great way for employees to manage the switch over to EVs and many people are taking the opportunity for their employer to help them make the big transition. As well as the environmental and motoring benefits of driving EVs, there are also financial benefits for the employee. The cost of living crisis is really biting in 2022, and any day-to-day cash saving is being eagerly accepted by employees across the UK, but there are many benefits for the employer too.
- Sustainability targets
Whether your business has third party environmental certification such as ISO14001, has its own internal targets and objectives or is simply acting on a moral obligation, changing a fleet to EVs is definitely the right way to cut CO2 emissions and promote more sustainable motoring. This is an immediate way to demonstrate an improvement in the sustainability of the business, and will provide cost and public relations benefits also.
- Reduced national insurance contributions
Salary sacrifice car schemes are an HMRC-approved employee perk, and the main financial benefit comes from the fact that the salary reduction is taken before tax, so less tax and national insurance is paid by the employee. However, this also means the employer pays less national insurance contributions. Furthermore, paying fuel costs for an employee’s mileage is also considerably cheaper for an EV than a petrol or diesel vehicle.
- Fleet management
In many cases, EVs taken through a salary sacrifice car scheme qualify as grey fleet, if the vehicle is used for business purposes. And because the EV comes from a leasing company, the vehicles will be new, in warranty and come with an integrated service and maintenance package. Also, because leasing is more affordable than purchasing a vehicle, the employee can typically afford a higher spec of vehicle than they otherwise would. This benefits the employer and the fleet manager because the vehicles are therefore more reliable and cost-effective.
- Employee morale
The perks offered by salary sacrifice schemes act as an effective method of promoting fairness and inclusion across the organisation. Such schemes need to be open and available to everyone, so they remove any kind of exclusivity for higher levels of the business and show that everyone in the organisation is considered, valued and appreciated. This is a great tool for motivating employees and therefore making them more productive for the business.
- Better recruitment
Increasingly, employers are learning to promote salary sacrifice car schemes as a key factor in the appeal of a business and having a role within it. If a potential employee is considering their options, then this kind of perk may just seal the deal. Salary sacrifice car schemes can therefore be used to attract a better standard of employee which ultimately will improve the business.
- No cost to the employer
Other than a few administrative tasks, a salary sacrifice car scheme is effectively free of charge for the employer. There is no cost to join the scheme or run it, indeed, there are only cost savings. In addition to that, the flexibility offered to employees by the scheme, such as lease terms, costs, release clauses etc mean the salary sacrifice car scheme can be promoted as a no-risk commitment for both the employee and the employer.
Find out more about salary sacrifice schemes: What is a salary sacrifice scheme?
If your business wants to start a salary sacrifice car scheme then contact Pink Salary Exchange today for access to an industry-leading, HMRC-approved scheme which has been designed by experts in tax, leasing models and electric vehicles, and which is proven to provide a range of benefits to your business.