Competition over top talent is increasingly fierce. Traditionally companies vied for skilled labour through competitive pay. Now however, attraction and retention require a multifaceted approach. With strained budgets impacting pay rises, increased pressure has been placed on businesses to find other ways to motivate employees to join and stay. As a result, many are elevating their benefit offering.

Studies have shown that 75% of employees are more likely to stay with an employer because of their benefit programme, 69% would consider choosing one job over another if it offered better benefits, and 80% would choose extra benefits over a pay rise. 

Additionally, amid cost-of-living issues and rising inflation, financial benefits are topping employee requests, with 90% of employees stating that financial benefits are essential to meet their financial goals. 

As a result, salary sacrifice benefits have started to really stand out, particularly for cars. Their popularity has surged in recent years as they provide a simple, tax-efficient way for employees to access high-value benefits, not only with cars, but pensions, technology, childcare support and cycle-to-work schemes. Depending on the scheme, employers can also make considerable savings while improving workforce mobility and supporting broader organisational goals around sustainability and retention.

Here’s why salary sacrifice benefits work so well for everyone:

A win-win financial model

At its core, salary sacrifice is very simple. An employee agrees to give up a portion of their gross salary in exchange for a non-cash benefit. Because the deduction is made before income tax and National Insurance (NICs), taxable income is significantly reduced. 

This produces considerable savings in the form of greater purchasing power, as employees can access benefits, like company cars, bikes or technology at a cheaper price than if they were paying on the high street with their net salary. This also enhances accessibility, allowing more employees to access perks that they may not have been able to afford outside of work.

But the benefits don’t stop there. Employers also see considerable savings. Because employees have reduced gross salaries, employer NIC contributions decrease too. This provides businesses with extra money to reinvest in other ventures that can strengthen their employer brand, without breaking the bank. 

Supporting financial wellbeing

Rising employee costs and growing economic uncertainty has made financial wellbeing increasingly central to employee needs, HR strategy and business outcomes. When employees are stressed about their finances, profit can take a toll. 

For example, research indicates 76% of financially stressed employees have admitted their situation has had negative consequences on work, for reasons like increased absenteeism, reduced engagement and lost productivity. 

But salary sacrifice helps mitigate these outcomes. Beyond significant savings and greater purchasing power, schemes help make budgeting easier and less stressful. Whether applied to pensions, childcare, cycle-to-work schemes or technology, salary sacrifice helps turn ongoing expenses into manageable, fixed payments from monthly payroll. 

With many schemes, like cars, this reduces having to find multiple providers for one product, which reduces worrying associated with unexpected bills - helping employees gain greater clarity and confidence over their expenses.

Why car schemes are leading the way

While salary sacrifice covers a number of benefits, vehicle schemes have become one of the most effective, popular choices. 

For many employees, a car is essential - whether it’s to support mobility to and while at work, childcare or leisure. However, car ownership can be expensive, unpredictable and involve multiple contracts - like deposits, insurance and servicing - creating additional stress. 

With schemes like Tusker’s, this can change.

Through Tusker, employees can drive a brand new car, or cheaper pre-loved alternatives, by sacrificing a portion of their gross monthly salary. And because of low Benefit in Kind (BiK) rates - particularly for electric vehicles (EVs) - the tax efficiency can be significant, making EVs far more affordable than they often can be through traditional vendors financing methods..

Additionally, Tusker provides an all-inclusive package, with monthly payments covering insurance, road tax, servicing, maintenance, MOTs, replacement tyres and RAC breakdown cover. As stated earlier, this reduces the stress involved with managing multiple contracts and facing unexpected bills, allowing employees to improve their mobility and financial stability, without worrying.

Reduced admin and risk

Car schemes, like Tusker’s, are also designed to manage risk. For example, Tusker’s “Lifestyle Protection” helps safeguard against early termination fees in qualifying circumstances such as long-term illness or employees leaving the business, providing reassurance for both employees and employers.

There’s also reduced administrative burden for HR teams as the whole process, from ordering and delivering to ongoing support, is managed. This ensures the benefit runs smoothly, provides a fantastic employee experience and removes HR headaches - freeing up much-needed time elsewhere.

Boosting sustainability

Many salary sacrifice schemes also have the ability to boost ESG and sustainability initiatives. At a time when employers face pressure from multiple directions, with increased environmental and ethical transparency expected from employees, consumers and regulators, schemes can be designed for further wins. 

For example, companies can create salary sacrifice car schemes centered around electric or hybrid vehicles, as well as choosing cycle-to-work schemes. Both of which can support reduction of carbon from company fleets and help employees meet their own sustainability goals. This is particularly attractive to younger employees who are increasingly motivated to work for organisations that align with their ethics and values.

It also enhances accessibility to sustainability, making more environmentally-friendly options, like electric vehicles, more affordable for the average employee. 

Strengthening attraction and retention 

Ultimately, salary sacrifice works because it delivers tangible value.

In competitive markets where budgets need to be stretched, providing benefits that have multiple perks in one are becoming essential to talent retention and attraction. A car scheme, for example, delivers a brand-new vehicle, cost savings, stronger financial wellbeing, improved mobility and sustainability gains. That’s real differentiation.

Interested in a tax-efficient car scheme that can boost employee wellbeing and your finances? Visit Tusker.

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