Deciding on the make-up of your fleet and the best provider to meet your needs calls for some careful calculations
With new offers and providers entering the market all the time, company car salary sacrifice is becoming both more popular and more competitive. Ask any leasing provider whether they are the right one to choose and they will surely say “yes”. But it is not a decision you should rush into. After all, you will be relying on the provider to do much of the legwork of running the scheme.
Also, it is the provider’s range of cars that will be one of the key selling points to employees. And it is the provider you will need to trust to work closely and efficiently with one of your most valued assets – your people.
“You ideally want a provider who can work within any of your existing benefits schemes,” says Paul Hollick, general manager, sales development, at Alphabet. “You want to ask them what have been the take-up rates for any of their previous schemes and what have been the challenges in setting those up.
“You also want someone who is going to provide good levels of support – roadshows, communication, education, and so on – and who can offer an online delivery mechanism for employees that feels intuitive.”
Lower benefit-in-kind tax
When it comes to choosing the right cars, salary sacrifice schemes tend to work best with sub-120g/km CO2-emitting vehicles, which have lower benefit-in-kind (BIK) tax rates. But the exact composition of your fleet and whether you decide to cap emissions at a certain level or allow some staff, perhaps those at more senior levels, to have access to higher-CO2-emitting cars, will vary from business to business.
It is probably a good idea to speak to your potential leasing provider about the vehicle choices they offer and try to strike a balance between desirability, fuel economy, CO2 emissions and environmental issues, tax benefits and BIK, reliability and maintenance (particularly if your drivers are likely to do high mileage) and general value for money, says Ben Creswick, head of business development at Zenith Provecta. It may also be a good idea to have a carbon footprint analysis carried out, as well as compiling some real life calculation breakdowns.
There may also be cultural factors to consider, says Chris Bolan, head partner at Compass Reward Consulting.
“I’ve known occasions where a UK subsidiary of a US parent has run into issues of resistance simply because this is a benefit that is much less common in the US,” he points out.
Phil Peace, director of sales at Hitachi Capital Vehicle Solutions, says: “You should be looking for someone who has robust, transparent systems and who can clearly demonstrate that they are able to run those systems efficiently and effectively. You also want to go for someone who clearly understands the proposition and who has access to reasonably priced funding.”
Relationship between providers
Another factor to consider, if it is going to be a bolt-on scheme, is how the relationship between providers will work in practice. Access to a good salary sacrifice support desk is important, too, says Phil Cottee, product services manager at LeasePlan.
“For many employees, getting a car through salary sacrifice is a new world for them, so they may need support and guidance about what to do if something goes wrong with the car or when they need to take it in for a service, and so on.”
Ultimately, however, the key factor will simply be whether you feel your provider really “gets” what you are trying to achieve through your company car salary sacrifice scheme – tax benefits, environmental kudos, retention and loyalty, or all of the above. You are going to have a close and ongoing relationship with your provider, so it is important both sides can feel open, honest and transparent with each other.
Bolan adds: “What is important, whatever provider or adviser you choose, is that you have gone into it with your eyes open. You need to be aware that, yes, it may well be a good thing to do, but also an awareness of all the things that need to be done first to get it right.
“You also want to strike a balance between going for a provider who can provide you with good, competitive fleet management services, quotations, a good range of vehicles, and so on, and someone who also understands all the employment law or taxation issues.”
Key choices in vehicles and providers
- Be proactive in deciding on the composition of your fleet and whether (or to what level) it will be CO2-capped.
- Assess the balance you want to strike between emissions, reliability, brand image, MPG and tax benefits.
- Ask about the provider’s support desk and how they intend to work alongside your business, especially during the initial communication and promotion phase.
- Realise it will be a close relationship, so needs to be open and honest.
- Ensure the provider understands all the legal and taxation issues.
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