It is common for an employer to have misgivings about entering into a salary sacrifice car scheme. It can feel like a major upheaval and a shift in approach in terms of the employee/employer relationship. Managing change is always difficult. However, this should be viewed as a completely positive thing, and the reality is that a salary sacrifice car scheme can have huge benefits for all parties.  

Here we have drafted some common questions that all employers should ask themselves when considering a salary sacrifice car scheme. This is a good way to prepare the ground and to confirm that the business is in the right place to offer a scheme and enjoy the various benefits of it. And of course, in all cases we have answered these questions.  

1. What are the admin costs?

There are very few admin costs attached to the scheme because the scheme provider will usually fully manage it. At Pink Salary Exchange we take care of the signing-up, registration and record-keeping and provide all training and information literature. This is all visible via the online management portal also. There is a small amount of admin required by the fleet department in terms of compliance issues and financial transactions, but this is restricted to what is absolutely necessary.   

2. Will the scheme benefit my business financially?

Fundamentally, the business will be paying lower national insurance costs for those employees registered on the scheme, as they are taking income tax and national insurance off their gross salaries. But the scheme will also reduce the fleet costs of the business. It is possible to benefit from the best lease deals available on the market and it is also possible to agree batch lease deals for multiple vehicles.  

3. What types of vehicle are included in the scheme?

To qualify for taking the salary portion off the employee’s gross salary, the chosen vehicle needs to have zero emissions, and hence will be a fully electric vehicle. A good scheme will have access to a broad range of vehicles in terms of motoring brand and models, i.e. small city cars, hatchbacks, SUVs, saloons, estates and MPVs. This is the case with Pink Salary Exchange as we have developed long-established partnerships with major motor manufacturers, which means we can offer affordable lease deals, on flexible terms and with good availability also.   

4. What is the contract length?

Most leasing companies offer lease deals from six to 48 months. Some even extend this to 60 months. 

5. What are the risks to the business?

Very few. There are financial benefits to the business, and only low admin costs. The business also benefits from better grey fleet management and compliance management. The scheme can also improve productivity by engaging employees, promoting loyalty and reducing staff turnover.  

6. Does signing up to the scheme change the terms of employment?

Only in a very minor way. The salary amount is changing for each employee signed up to the scheme, so this has to be reflected in the employee’s contract, in accordance with section 4 of the Employment Rights Act 1996. Signing up to the scheme is effectively signing an agreement to change the terms and conditions of employment in respect of the salary amount.  

7. Does a salary sacrifice car scheme help with compliance?

If you sign-up with Pink Salary Exchange, the online management portal provides and maintains all the compliance information the business will need, in terms of tax, insurance, service and maintenance, MOTs and licensing. All this information is maintained for you. The positive environmental impact of switching vehicles to zero emission vehicles will also help you comply with environmental targets, such as ISO14001 certification.   

8. Should I offer the scheme to all my employees? 

Yes. Employee benefits are a great way to promote fairness and inclusivity, and should engage and motivate employees. A salary sacrifice car scheme is an attractive feature of what the business offers its employees and hence will help to attract and retain good employees, and therefore it should be open to everyone. At the same time, you should ensure that no employee’s salary goes below the threshold for the minimum wage by taking the salary sacrifice, and also you should monitor compliance issues such as ‘is the employer 18?’, ‘does the employer have a clean, full driving licence?’ etc.  

If you require any further advice or information on signing up for a salary sacrifice car scheme, then contact our expert team at the Pink Salary Exchange today.