If your organisation has a salary sacrifice car scheme, the changes announced by the chancellor in the autumn will apply to your scheme. In a nutshell, it means that in the future, cars will need to have emissions under 75g Co2 to obtain the optimum tax benefit. Most makes and models do not come with engines achieving this ultra-low status, and those that do, in our experience, cost more to buy in the first place, and are either not discounted at all or at rates considerably less than higher-Co2-emitting cars.
So, in order for you to give your staff a benefit that they can really make use of, consider a voluntary benefit scheme instead. At no cost to your organisation, your staff can chose the car that really suits their needs, not just the one which has the least Benefit In Kind tax. Whether they need a small three-door or a large 4×4 vehicle, discounts of up to 40% on brand-new cars, delivered to them and including a full manufacturers’ warranty, will be available. Unlike salary sacrifice, this scheme is open to friends and family also, and anyone can drive the car as long as they are insured on it.
The other significant difference compared to salary sacrifice is that the individual is underwritten and makes the payment, rather than the company being underwritten and responsible for the payments. When you factor in the cost of a salary sacrifice scheme to your organisation, employers NIC, the time needed to administer the scheme in house, and the restrictions, a voluntary benefit car scheme provides a clear advantage.
Scheme details at a glance:
|Affinity Scheme||Salary sacrifice|
|Personal Contract Purchase or Hire (PCP/PCH)||Contract Hire or Outright Purchase|
|Employee controlled||Employer controlled|
|Flexible make and models||Restricted make and models|
|Employee retains savings||Savings not necessarily available|
|Employee pays for services directly||Employer pays for services|
|Employee arranges with provider||Employer arranges with provider|
|Employee insures vehicle||Employer insures vehicle|
|No payroll adjustments||Payroll adjustments and P11D reporting|
|No HMRC clearance required||HMRC clearance advised|
With no set-up costs, no minimum company size and getting up and running with virtually no input from your organisation, this type of benefit is a great way of adding value to your employee benefits package with no downside. Your employees can drive a heavily discounted car to suit their personal and professional needs, pay no Benefit In Kind tax, and all at no exposure to the company.
Contact Russell Hickey on 07970 210011 or email [email protected] to discuss how this scheme could benefit your employees