“We don’t charge a fee for setting up the salary sacrifice scheme. The only thing we ask is that we have exclusivity when it comes to vehicle supply and a minimum supply – usually two cars per year.
“In terms of administration, we would expect that the client would need to put aside approximately one hour a week for the first 6 weeks.”
So is salary sacrifice right for your firm? SMEs traditionally don’t like anything too complicated when it comes to managing company cars. But there are plenty of advantages to running such a scheme that could make your business an excellent place to work.
And save you money at the same time.
Salary sacrifice key points
- Your employee choses a car, and you as an employer lease the car from a leasing company
- You then deduct the cost from the employee’s gross salary
- As an employer you get a reduced National Insurance bill although NI is payable on the car benefit
- Your employee saves NI and tax on the sacrificed salary – but is now liable for company car tax
- Salary sacrifice schemes need to be implemented correctly – best to get HMRC approval so you don’t land yourself in hot water over tax
- Watch for early termination charges if an employee leaves half way through the lease
- You will need to ensure the drivers are fully aware of company car policy and that you have a prescribed duty of care process for running company cars
- Salary sacrifice can help retain staff and make your SME business and attractive place to work
