NEW data from Volkswagen Financial Services, reveals that one third of drivers in the UK have bypassed an essential service on their car due to the cost-of-living crisis.
The squeeze is hitting younger drivers hardest, with just under half (43%) of 18–34-year-olds likely to skip vehicle maintenance to save money.
UK drivers’ ability to afford vehicle maintenance is compromising the safety of drivers and other road users – and for businesses, it’s increasing grey fleet risk – with the research also revealing that only 40% of drivers feel financially prepared to pay for essential work to keep their vehicle safe. Additionally, one in four drivers has got behind the wheel knowing their vehicle needed essential maintenance – a number increasing to 46% for those under 35.
With grey fleet vehicles – those owned and driven by employees for business purposes – making up 40% of the UK’s work vehicles and 62% of private car use attributed to work-related activities, this has a significant knock-on effect for businesses. Employers have the same legal responsibility to ensure grey fleet vehicles are well-maintained and safe to drive, as they have with company cars. As such, employers have a crucial responsibility to ensure their grey fleet is road-worthy and offer solutions to employees struggling to keep up with vehicle maintenance.
A salary sacrifice car scheme can help mitigate this risk, by offering employees the opportunity to get a brand-new vehicle with insurance, road tax, maintenance and servicing costs paid monthly through their gross salary. This business benefit comes without the extra business cost – which keeps all vehicle servicing and maintenance responsibilities in the hands of the employer, eliminating the safety risks associated with grey fleet vehicles.
As well as eliminating grey fleet risk, a salary sacrifice car scheme also provides an excellent way for employers to incentivise the uptake of electric vehicles (EVs) to those employees who may not qualify for a company car. The current benefit-in-kind (BIK) tax obligation for EVs is just 2%, and it will stay at this level until April 2025, compared with petrol or diesel vehicles, where the BIK rate could exceed 30%. This helps to support businesses’ low-carbon strategies – and can also position businesses as more attractive to potential talent – with 65% of UK office workers more likely to work for a company with robust environmental policies.
A salary sacrifice car scheme is also a highly attractive benefit for employees, as it also offers substantial Class 1A National Insurance (NI) savings, which sees lower NI contributions for employees, as well as employers.
James Fields-Davies, Head of Fleet Development at Volkswagen Financial Services (VWFS) Fleet, said: “As the cost-of-living crisis continues to put additional financial strain on people, making many everyday bills, such as car maintenance costs, a potential source of anxiety, a salary sacrifice car scheme gives businesses a no-cost solution to take control of the safety of their employees – and other road users – when they’re driving for work purposes.
“With mounting costs for both businesses and employees, salary sacrifice can be a win-win solution – at a time when many employees can’t afford to keep up with essential vehicle servicing and maintenance, and when businesses need to offer competitive benefits to stand out in the recruitment market while battling rising costs themselves.
“Salary sacrifice car schemes don’t cost anything to offer – giving businesses a way to battle the impact of the cost-of-living crisis on grey fleet safety, keep up with the talent market and champion sustainability agendas, all without increasing overheads.”
