A salary sacrifice cars scheme allows employees to give up part of their salary in return for a non cash benefit, i.e. a car. This is not subject to income tax or National Insurance Contributions as they are not a cash allowance or part of your gross salary. This also means that lower tax and NI is paid overall by the employee. Therefore, significant savings can be made, making a salary sacrifice scheme a great way to have a car. It is a very attractive benefit for any employer to have in their repertoire and can save the business money too.
It is negotiable and may depending on what your company offers, but typically the following is included:
- Finance of the vehicle
- All servicing, including tyres, batteries and exhaust
- Fully comp insurance, including breakdown cover
- Road Tax
- Driving licence check
The Benefits for the Employee
The employee will get a brand new car provided serviced and insured for an affordable price. All the employee has to do is add the fuel. Depending on the agreed limit, there is a wide choice of fuel efficient vehicles for employees to pick from.
There are no deposits or credit checks necessary, and the agreed monthly cost is automatically taken from their salary so you don’t have to remember to pay. All costs are fixed until the end of the term, at which point the employee simply hands the car back.
The Benefits for the Employer
Having this scheme is an attractive benefit for an employee- it will help to attract and maintain employees. It is cost neutral and could even achieve National Insurance Contribution savings if structured in the right way. New cars are available to your employees that aren’t eligible for company cars. It can be used in conjunction with a company car scheme, or as a replacement.
Hitachi Contract Hire & Vehicle Solutions
Hitachi Contract Hire & Vehicle Solutions are a company that offer a service to help you implement this car salary sacrifice scheme in your business. They make sure that the scheme is suitable for your company and that you and your employees understand how it works. They ensure that your salary sacrifice scheme is designed, set up and ran to comply with employment law, statutory benefits and HMRC. They are competitively priced as they are able to make savings within their company, and then pass them on to their customers. Hitachi provide support through set up, any admin or running issues such as employees leaving, maternity pay as well as marketing the event to maximise employee take up of the scheme.
This scheme may not be suitable for all businesses and Hitachi Capital will be able to advise without bias whether the Salary Sacrifice car scheme is right for you.