53% offer salary sacrifice to non-company car drivers

What are the latest trends in company car schemes?

The number of employers offering salary sacrifice to non-company car drivers has increased as a result of low tax rates on electric vehicles (EVs), according to a new report by Arval Mobility Observatory.

The fleet research platform’s 2021 Arval Mobility Observatory barometer report was compiled from interviews of nearly 5,200 fleet managers across 20 countries.

It found that the zero or low benefit-in-kind tax rates on electric cars introduced by the UK government in April 2020 had powered the majority of this increase in salary sacrifice schemes, which has risen from 39% last year to 53% this year.

The research revealed that last year, a fifth of fleets said they were offering some form of finance solution, which has risen to more than a third (37%) this year. In addition to salary sacrifice, 55% included a cash allowance in their offered car schemes and 39% provided personal contract hire.

Shaun Sadlier, head of Arval Mobility Observatory in the UK, explained that low taxation on EVs has made salary sacrifice a good option for employees and employers, meaning that the latest, most advanced and environmentally-friendly cars can be offered to staff at “extremely attractive” monthly rates, potentially seeing salary sacrifice continue to accelerate further in the coming years.

“This increase is concentrated among larger employers with more than 500 employees, which something that is probably to be expected. It provides a means for employers to offer the considerable benefit of new EVs to their employees at little to no cost to their company and will continue to do so if benefit in kind taxation remains low,” he said.

Sadlier added that what is emerging from the research is a definite future mobility role for EV-based salary sacrifice as a “key” element in a wave of new benefits initiatives that are designed to bring “innovative options and ideas” into play for employees, with only a very limited investment required by their employer.