Salary sacrifice schemes have been hugely beneficial for employers and employees for a long while.
These schemes often provide tax and National Insurance (NI) savings for both employers and employees.
They also provide employees with an alternative way to spread the cost and save on a number of important areas of their daily lives.
The UK Government has looked to utilise salary sacrifice schemes in recent years to help meet policies and targets. The Car Benefit scheme is a great example of this, where Benefit-in-Kind (BiK) tax has been reduced for Ultra Low Emission Vehicles (ULEVs) as the UK looks to hit its emissions targets and encourage electric motoring.
So, what do your salary sacrifice scheme options look like today? And how can they support the changing needs of your employees?
Bike to Work Scheme
- 75% of employers offer the Bike Scheme to employees (Employee Benefits, 2020)
- 6 in 10 Bike Scheme users would drive to work if they didn’t cycle (Cycle to Work Alliance, 2021)
- 7 in 10 employers said the Bike Scheme improved staff health (Cycle to Work Alliance, 2021).
The Bike Scheme is a hugely popular salary sacrifice scheme allowing employees to save up to 42% on the cost of a brand-new bike and accessories.
Cycling has become even more popular in recent times and could work well alongside hybrid working to help employees keep their carbon emissions low and leave the car at home when they commute back to the workplace.
The UK Government is also investing in making cycling easier with much needed plans to improve infrastructure in the near future as part of an active travel fund.
Our Bike Scheme is run in conjunction with Cycle2Work, meaning employees can access over 1,500 bike shops and get loads of other great extras with the scheme too.
The Bike Scheme helps employees with their commute, health and wellbeing and helps save them money too.
Car Scheme
- In November 2020, the UK government announced the end of the sale of new petrol and diesel cars by 2030
- All new cars and vans in the UK will be fully zero emission at the tailpipe from 2035
- 60% of Brits said in 2020 they were more concerned about climate change than they were in 2019 (Ipsos Mori, 2020)
- For the tax year 2021-2022, BiK on Ultra Low Emission Vehicles (ULEVs) through the salary sacrifice electric car scheme is just 1%. For 2022-2023 it’s just 2%.
Arguably the best and most affordable way to drive electric is through the salary sacrifice Car Scheme.
In May 2021, the market share of electric vehicles was 14.7%, compared to just 3.2% in 2019 and 1.1% in 2015, according to the Department for Transport, which shows just how rapidly the electric vehicle market has grown.
This also shows how quickly it’s likely to grow in the coming years. In the not-too-distant future, most of us who drive will be driving electric.
In preparation, more employers are installing electric chargepoints at their workplaces and doing so through the Workplace Charging Scheme, designed to support businesses, charities and organisations in installing electric chargepoints, helping combat any “range anxiety”.
The UK Government have seen the salary sacrifice Car Scheme as an opportunity to help more people drive electric by reducing BiK tax for ULEVs on the scheme.
Through the Car Scheme on our Salary Extras employee benefits platform, employees can take advantage of all this and more and drive electric for less.
MotorSave
Salary sacrifice can now be used to save money on car maintenance and repairs through the brand-new salary sacrifice scheme MotorSave.
Through the scheme, employees can save up to 12% and spread the cost of maintenance and repair work done on their car.
The scheme is especially convenient for servicing and MOTs which are usually carried out annually. Employees can set up a regular agreement with their employer through the scheme to spread the cost of the work over 12 months every year.
As motorists know, maintenance and repair work can really add up and so savings through the scheme can go a long way.
Many employees will be using their car more again as they return to the workplace either part-time or full-time and so keeping on top of repairs and maintenance is essential.
Making this easier and more affordable through salary sacrifice for employees is likely to be a big hit with employees.
MotorSave is offered in conjunction with Halfords through our employee benefits platform Salary Extras and can be set up for you and your employees in no time.
Holiday Trading
With the Holiday Trading salary sacrifice scheme, employees can get extra annual leave and spread the cost while saving on tax and NI.
A lot has been made of flexible working in recent times and there’s no doubt that employees now expect more flexibility and work-life balance options from employers than before.
Over the last 18 months, through lockdowns and isolation from our loved ones, there’s no doubt we’ve come out the other side more appreciative of our time spent doing the things we love.
This increased focus on work-life balance has made schemes like Holiday Trading even more valuable for employees.
For employers, the scheme shows a commitment to giving employees more options with their work-life balance.
The fact that the scheme is a salary sacrifice scheme means savings too and makes improving work-life balance more manageable financially.
Employers also benefit from reduced salary costs and reduced employer NI too.
The Holiday Trading scheme not only meets the new needs of employees but can be incredibly cost-effective for employers too.
The Holiday Trading scheme is also offered through our Salary Extras employee benefits platform and can be set up to suit the needs of you and your employees.
There’s a ton of benefits to salary sacrifice schemes for employers and employees, so it’s no wonder they’re so popular.
At caboodle, we’ve championed salary sacrifice as a way for the UK Government to meet even more policies and targets, just like the Car Benefit scheme has been used to support green initiatives.
Moving forwards, we see salary sacrifice schemes as incredibly important for meeting the new needs of employees and for supporting employers with recruitment and retention in particular.
For now, including these schemes as part of your employee benefits proposition really should be considered as they’re hugely beneficial for employees as well as employers!