“The main savings for most SMEs will be in terms of employer National Insurance, and the reduced payroll will naturally free-up cash-flow.

“As salary sacrifice works by encouraging low emission cars, this is also good for the company’s “green” ethic; in fact, we usually find that 35% of our customers report a reduction of CO2 emissions by up to 35%.”

It’s not all one way good news, of course. You will need to consider what happens to the car if the employee leaves – early termination fees can be expensive, although insurances are available to cover this possibility.

Implementing salary sacrifice

Salary sacrifice schemes, like any other, need to be properly implemented, and crucially they need to be fully explained to employees who are likely to benefit from them.

You also would be advised to check with your local Inland Revenue office to make sure that the scheme you want is fully tax compliant as you are altering your employee’s contract of employment.

However, some of these issues can be overcome. Andy Leech again:

“We have a simple plan when it comes to putting salary sacrifice into any of our client’s companies. We have a simple ‘rules’ session, we then set up a dedicated quotation engine and an employee pack. This is followed by session making sure the end users are happy with it and finally, our on-site launch which is where we have the opportunity to speak with employees personally and answer any questions that they may have.