Businesses and their employees are dealing with many challenges right now, including rising fuel and energy costs, rising inflation and the climate emergency to name just a few.
Employers are expected more than ever to support employees as much as possible through these challenging times.
We’ve seen businesses implement many new initiatives to tackle all manner of challenges employees face from wellbeing days to combat burnout to one-off payments to tackle the cost-of-living crisis.
But where do employee benefits come into this? In particular, how can salary sacrifice schemes help?
Salary sacrifice schemes are a tool waiting to be utilised by employers that can provide truly unique support for employees.
Why salary sacrifice schemes are so valuable
The salary sacrifice arrangement is an arrangement unique to employers that can provide a type of support to employees they won’t find anywhere else.
Only employers can offer employees this kind of arrangement.
Not only that, salary sacrifice can provide employees with significant Tax and NI savings on the benefit they receive.
One of the most important features is that of spreading the cost for the employee of the benefit they receive.
Salary sacrifice can be used to ease the financial burden of a large initial cost for something while offering unique savings at the same time.
For the employer, NI savings can be made to make salary sacrifice schemes incredibly cost-effective and in some cases even cost-neutral to implement.
All this makes salary sacrifice schemes incredibly valuable not just for employers but for employees too.
So, how can they help with some of the big challenges employees face right now?
Rising commuting costs
The rising cost in fuel has made the commute a whole lot more expensive for employees.
Many find themselves in tandem wanting a mixed hybrid approach to work but also wanting to save on fuel and energy costs as the winter approaches.
The Car Benefit scheme provides an option whereby employees can use salary sacrifice to switch to a new car, in particular a ULEV or fully electric vehicle.
Switching to electric through the scheme can not only help employees reduce their carbon emissions output but can help reduce fuel and therefore commuting costs too.
Furthermore, employees can use the scheme to effectively release equity from their current car they may have already paid off a portion or all of the cost to provide a short term financial boost.
Many face the prospect of increased bills and drastically increased cost of living in the short to medium term and so a short term financial boost could go a long way.
Employees can use the Car Benefit salary sacrifice scheme to sell their current car and switch to a salary sacrifice arrangement and get a new electric car instead.
Through the scheme, employees will more often find the cost is cheaper than through high street lending options due to the nature of salary sacrifice.
Employees can save on Tax and NI and in some cases even Benefit in Kind depending on the vehicle they choose.
All this makes the Car Benefit salary sacrifice scheme a hugely valuable option particularly in the months ahead.
Rising car maintenance costs
The rise in the cost of fuel makes running a car even more expensive than it already can be.
Of all the costs of running a car, maintenance and repairs can often provide some of the most unexpected and largest costs.
Such a cost could put some in a really difficult financial position as the cost of living increases.
The MotorSave scheme helps employees utilise salary sacrifice to not only spread the cost of car maintenance, repairs, MOT’s and servicing but save up to 13.25% too.
A scheme like this could be crucial in helping employees avoid large, unexpected costs that could push them into debt or into borrowing with high interest rates, all while keeping them on the road.
It crucially gives employees options and utilises the power of the salary sacrifice agreement to make maintaining a car much easier and less expensive.
So, for employees that don’t want to switch their car, MotorSave could be a great way for them to still ease the financial burden of running a car.
The climate crisis
Cycling has become even more popular in recent years as people look to reduce their carbon emissions output in the midst of the climate crisis.
As a result, the Bike to Work scheme has really taken off. At caboodle, we’re seeing take-up of the scheme from employees go from strength to strength.
The scheme allows employees to save up to 43.25% on the cost of a brand-new bike and accessories, all while spreading the cost.
There’s now no limit on the scheme too if the employer wishes. This means higher-spec e-bikes can now be acquired through the scheme by employees, making cycling much more accessible as well as affordable.
The Bike to Work scheme has the added benefit of helping employees use the commute to work exercise into their daily routine and improve their overall health and wellbeing, as well as saving on fuel costs.
The Bike to Work scheme is one, if not the most popular salary sacrifice scheme and is a no-brainer for any employer to provide.
Demand for flexible working and avoiding burnout
In recent years we’ve seen the trend of employees demanding more flexibility from their employer.
Flexible working has become more of a demand, but burnout has also become more prevalent.
There’s been research to suggest that since working from home took off in 2020, employees are actually working more hours even in hybrid working roles.
The Holiday Trading scheme helps give employees more control and flexibility over their annual leave by allowing them to buy and sell annual leave from and to their employer.
This is also done through a salary sacrifice arrangement, meaning employees and employers save on NI.
Employers can also save on salary costs which makes the scheme even more cost-effective to implement.
What this all means for businesses
Salary sacrifice schemes like these can help attract talent by targeting some of the key challenges employees face today with arrangements that can only be found through the employer.
They can also help improve employee engagement as employees engage with their benefits to spread costs, save money and gain greater control over their financial wellbeing and their health and wellbeing.
Employees that are more engaged with their benefits are more likely to stay with their current employer too, particularly where they provide vital savings such as on car maintenance and the commute.
All this helps improve the overall wellbeing of the workforce, improve recruitment and retention and in turn boost business performance.
At caboodle, we provide all the salary sacrifice schemes mentioned here and much more for businesses of all shapes, sizes and industries globally. For more information, get in touch and we’ll run through how we can support your business and your employees with some of the biggest challenges they face today.