As UK businesses set out on the ‘road to zero’ and de-carbonisation of their fleet vehicles, many schemes are being set up with an onus on promoting the use of electric vehicles (EVs) and hybrid vehicles. These are particularly effective if they can be tied in with working and financial benefits, and salary sacrifice car schemes are one of the best examples of this.
Salary sacrifice schemes make sound financial sense to both employees and employers, as the employee agrees to give up part of his/her salary in exchange for a non-cash benefit. Different organisations will offer different schemes, but popular benefits include ultra-low or zero emission vehicles, extra pension contributions, childcare, training courses and additional annual leave.
The scheme works via an employee negotiating an agreement with the employer. This will result in the employee giving up a portion of their monthly pay in return for the benefit, and this agreement becomes a written contract. Some salary sacrifice agreements are flexible in that you can opt out of a scheme, but you may remain liable for any outstanding payments, such as for a mobile phone that remains part of a separate contract.
How salary sacrifice schemes benefit the employee
The biggest benefit for the employee is that, from 6th April 2017, employees who agreed a salary sacrifice scheme for pension contributions, childcare, cycle to work schemes or ultra-low or zero emission vehicles, have had their salary portion deducted before it is subjected to income tax and national insurance payments. This reduces the real cost to employees because it reduces the amount of income tax and national insurance you pay. This is also reduced for the employer’s national insurance contributions.
For other non-cash benefits not listed above, such as mobile phones, training courses and additional leave etc, the salary sacrifice payment is taken after tax, so is less financially beneficial. However, salary sacrifice schemes are flexible for the employee because they can be adjusted to reflect lifestyle changes which might affect your income either negatively or positively. You should be aware, however, that the reduction in your nett monthly salary ‘could’ affect your pension contributions and other payments which are based on average earnings over a fixed period, such as sick pay and maternity/paternity pay. These differ by organisation though, so you should seek advice from your human resources professionals.
Pink Salary Exchange
The salary sacrifice car scheme promoted by Pink Salary Exchange is approved by HMRC and involves employees receiving a brand new or used zero emission EV, or an ultra-low-emission hybrid vehicle on a lease agreement which could be a minimum of 12 months or up to 48 months. At Pink Salary Exchange, our experts have developed a next generation salary sacrifice scheme using their extensive experience to deliver the UK’s only 100% flexible and 100% risk free scheme.
We believe our salary sacrifice car scheme is unique in offering used EVs as well as brand new vehicles. This offers flexibility as well as cost savings of up to 15% compared to other schemes. Take a look at all the Pink Salary Exchange features and benefits.
Our unique salary sacrifice scheme
The employee can also benefit from the multi-bid process that we utilise. This is an effective procurement method which means that Pink Salary Exchange can use the many professional partnerships and relationships we have developed over the years, for the customer’s benefit. This means the employee can enjoy competitive lease deals with the best motor manufacturers at the very best prices available. This also extends to the service and maintenance deals that we can find and add onto your all-in-one monthly payment.
Employers themselves can benefit from our fleet management solutions, grey fleet management (i.e.. vehicles that are not company-owned but are used on company business), reduced CO2 emissions and an innovative online system that is accessible and user-friendly.
We believe that salary sacrifice car schemes are crucial in organisations making good on their commitment towards zero emissions, but they also promote better morale and productivity and the retention of good employees within an organisation.
Now is the time to make use of the trusted and respected reputation of Pink Salary Exchange and benefit from the many years of experience that have helped develop a unique and industry-leading product, which everyone can benefit from.