SALARY sacrifice car schemes can be an affordable way to provide employees with a brand new fully insured and maintained car for a fixed monthly amount taken from their pre-tax salary.
They can also get more drivers into electric vehicles (EVs) and offset the carbon emissions for all non-electric cars ordered.
Employees can enjoy income tax saving on ultra-low emission cars, public sector discounts (where applicable), National Insurance savings, corporate finance rates and access to the newest vehicle technologies.
Tusker, with a fleet of almost 20,000 cars, specialises in salary sacrifice car schemes, helping organisations attract and retain employees while improving its carbon footprint.
Tusker’s aim is to put brand-new cars, and especially electric cars, into the reach of everyday drivers through salary sacrifice car schemes.
If an ultra-low emission vehicle (ULEV) is chosen, this can then generate tax savings for user choosers and improve duty of care and safety for grey fleet drivers. Although Benefit in Kind tax will also be due, if an electric car is chosen, the income tax and NI savings will far outweigh the company car tax due.
Alison Argall, Business Development Director at Tusker, said: “Salary sacrifice car schemes can be an affordable way to provide employees with a brand new fully insured and maintained car for a fixed monthly amount taken from their pre-tax salary.
Employees can also enjoy income tax saving on ultra-low emission cars, public sector discounts (where applicable), National Insurance savings, corporate finance rates and access to the newest vehicle technologies.
A scheme should be easy to implement and administer and with over 10 years’ experience, Tusker has a dedicated in-house team to deliver the implementation and marketing and all at zero cost to the employer.
Employer NI savings can also be achieved on all ultra-low emission vehicles ordered on the scheme. Tusker also minimises any risk for the organisation with a range of employer protections should employees leave due to resignation, redundancy and certain other lifestyle events.
Electric vehicles continue to grow in popularity on the scheme, rising from 3% of the Tusker total fleet in 2019 to 20% in 2020 and currently almost 70% of orders this year have been for an ultra-low emission car.
In December 2020, Tusker undertook a survey in conjunction with OnePoll and 63% of survey respondents said they would consider going electric for their next car.
This mirrors what Tusker experienced in 2020 with EVs accounting for 50% of deliveries and hybrids for a further 20%. Survey respondents said their main reason for going electric was the environmental benefit, closely followed by being able to charge at home and being taxed less on their salary.
Interest in EVs has come from all levels. Tusker has seen more 40% taxpayers switching out of their company car into a salary sacrifice car as they combat growing benefit in kind tax bills, particularly when driving a diesel. 95% of those higher rate taxpayers chose a ULEV, while 43% of basic rate taxpayers also took delivery of an ULEV.
How does salary sacrifice work for organisations?
Salary sacrifice car schemes provide a valuable benefit to help employers retain or attract good people to their organisation. A high value benefit it sits well alongside other salary sacrifice benefits such as Childcare and Cycle to Work vouchers.
Employers will benefit from Class 1 National Insurance savings for Ultra Low Emission Vehicles and by getting grey fleet drivers into a new car inclusive of maintenance and insurance, it helps them meet their Duty of Care obligations. Operating an Ultra-Low Emission salary sacrifice scheme contributes to improving their environmental footprint.
What are the benefits for employees?
Tusker’s car scheme is a full motoring package and so alongside a brand-new car, it also includes insurance, routine servicing and maintenance, replacement tyres, Breakdown cover and accident management. Salary sacrifice can also be a more affordable way for employees to drive a new electric vehicle with insurance, MOT, servicing, breakdown cover, road fund licence, replacement tyres and windscreens all included.
What doesn’t salary sacrifice include?
A salary sacrifice car scheme is designed to offer employees a complete motoring package, however it does not include fuel, payment of fines, engine oil or AdBlue top-ups outside of servicing. There could also be potential costs for any damage due to driver misuse and excess mileage charges.
What are the restrictions?
Employees need to be permanent employees and most employers want them to have passed a probationary period. It is also important to note that the amount sacrificed for a car must not take any employee below the National Living Wage. Tusker works with employers to ensure employees only view the cars they can afford based on their personal details.
What if your change jobs?
Tusker include Early Termination Protection within the scheme to give protection against the unexpected, for example redundancy, resignation or other events that change your financial situation. The Early Termination Protection starts once an employee has had a vehicle on the salary sacrifice scheme for a set period of time which is generally between 3 – 6 months. This means there is no termination charge payable if the car is returned early in some circumstances. Tusker work with employers to ensure they have an early termination protection to suit the demographic of their organisation.
How many cars can you have?
HMRC does not stipulate a restriction of how many cars an employee can have on the scheme. It is down to the employer’s overall benefits framework and employee affordability as it cannot take them below National Living Wage.
How do you set a scheme up?
Tusker provides a dedicated implementation team who complete the initial set up of the scheme with the customer. The project implementation plan ensures key personnel are aware of their responsibilities, roles, and deadlines from the outset and any admin requirements are kept to a minimum. Implementation generally takes between 4 to 6 weeks and at zero cost to the employer.
Does size matter?
There is no legislative restriction based on a company’s size and the benefit is designed for all employees, not just company directors or company car drivers however, we find that schemes tend to work better and get better take up for organisations with over 500 employees.
Can self-employed sole traders set up a scheme?
No, as under HMRC legislation you need to be an employee to benefit from salary sacrifice as you are agreeing with your employer to vary your terms and conditions of employment to receive a benefit in lieu of salary. Small organisations can however operate salary sacrifice schemes and there are providers in the market that specialise in working with SMEs.