Salary Sacrifice
What is it?
Salary sacrifice is a financial solution offered by an employer to employees through a leasing company. With a salary sacrifice scheme, you can lease a car with no initial, upfront costs on monthly payments and no further obligations at the end of the leasing term. Many leasing companies offer turnkey solutions that can be implemented within 4-6 weeks, including comprehensive maintenance and business insurance plans.
With 0% Benefit-in-kind on zero-emissions company cars from April 6th 2020, there has never been a better time to drive an electric car for business.
What are the benefits of a salary sacrifice scheme for an employee?
A salary sacrifice scheme allows employees drive a fully electric company car, by forgoing a portion of their gross salary. The amount will be deducted before tax and National Insurance contributions are applied, akin to childcare, gym membership or cycle-to-work schemes.
What are the benefits of a salary sacrifice scheme for an employer?
A salary sacrifice scheme allows employers to offer employees a new car at a lower cost with a tax-efficient payment method. Additionally, the company may also benefit from reduced National Insurance contribution payments. Salary sacrifice schemes are HMRC and VAT compliant.
Who is eligible for salary sacrifice?
Eligibility for salary sacrifice is dependent on company policy. If an employer offers a salary sacrifice scheme, it’s available to employees with a permanent contract. Employees can learn more about eligibility from their employer.
How do I lease an Electric Car through a salary sacrifice scheme?
Your employer’s leasing company provides an employee engagement portal, which is usually an online platform with step-by-step instructions. To learn more, reach out to us or visit the HMRC website.
Key Benefits
| Employer: Increased employee engagement and retention National Insurance contribution maintained and insured company cars with all in-life services managed and no daily involvement needed from the employer. Proven HMRC and VAT compliant scheme Reduced fuel costs No initial upfront costs Employee interaction and is covered by the leasing company Salary sacrifice schemes complement existing employee benefits | Employee: Access to a brand new electric car, at low monthly Contract Hire rates Significant National Insurance savings No initial upfront costs Flexible mileage and terms Fixed cost motoring without unexpected bills or service costs Access to new features and functionality with regular over-the-air software updates Convenient home or work charging, plus access to the world’s largest charging network for long distance travel |
Salary sacrifice is a tax efficient way to drive an electric car, however it is only one of the financial incentives
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