Case Study: Salary sacrifice savings add up for Deloitte
Back in February, accountancy and business advisory firm Deloitte introduced a salary sacrifice-based company car scheme for its 12,000 UK employees.
Since then, about half that number have registered for a quote and 400 confirmed orders have been taken. Mike Moore, director of global employer services, says: “We have had 70% take-up in the first few months and are aiming for 1,000 takers in the first year.” The scheme allows employees to sacrifice a proportion of their salary (taxed for a basic-rate taxpayer at 31%, including national insurance contributions (NICs)) and use it to take a petrol car with emissions of 120g per km of CO2 or below and pay tax on just 10% of the list price.
The firm cites the example of a Peugeot 107 three-door hatchback which, paid for privately, would cost £287 a month, but through the salary sacrifice scheme costs £158, equal to a 45% saving.
The employer saves on volume discounts and NIC costs as well as being able to recover VAT, says Moore. “Those entitled to the old car scheme, which is still running, have slightly more choice if they are at a more senior grade,” he says. “But they will still do it through salary sacrifice. As they come to the end of their term under the old scheme, they have to choose whether they want to go into the new scheme.
“This was something we started before the recession, so, for us, the biggest driver has been providing attractive benefits for all our staff. We want to be attractive as an employer.” Having a more environmentally-friendly fleet was also a key consideration for the firm. “All the direct taxes are based around the car’s CO2 emissions,” says Moore. “A third factor is we can now offer company cars to staff who might previously have been driving their own cars for work, so there is a duty-of-care element.” The key for anyone thinking of going down this route is to not to rush into it and recognise it will require some planning to do it right, says Moore.