Salary sacrifice is something you have probably heard about but don’t know too much about. Well, in this blog post we will be discussing exactly what salary sacrifice means and how this scheme can get you your perfect electric car. Also, you may find that you save a lot of money in the process. What a perfect start to 2024!
What is Salary Sacrifice?
The premise of salary sacrifice is really quite simple. You sacrifice some of your salary in exchange for a benefit that you pay less tax on. This is because the money is transferred before the point where income tax and national insurance are collected and so you have to pay tax on a lower sum.
Salary sacrifice has become increasingly popular in the last few years as a way to make cars more affordable. This is especially true in the modern electric car world where more and more people want to make the switch over to an EV. Salary sacrifice has made it possible to, not only get an electric car, but also get a more premium electric car than you would have otherwise considered. How great is that!
What do Employers Think of This Scheme?
Employers on the whole want to keep their employees happy and are willing to consider schemes that will benefit their workforce. Salary sacrifice has become a common feature in many businesses and many more are aiming to follow the green brick road over the next 12 months.
A survey taken recently by the Electric Car Scheme of 250 managing directors, finance directors and HR directors found that 16% of those companies are already offering a salary sacrifice scheme on electric vehicles. With the remaining 84% of those businesses, 83% are planning to offer the scheme in 2024 with 47% offering the scheme in the first half of the year.
The Salary Sacrifice Benefits for Employers
It isn’t just the employees that will benefit from the Salary sacrifice scheme. Employers also have a number of benefits for their efforts as well. Here are just some of those benefits that an employer can enjoy:
Staff retention is vitally important to employers. When you have great staff working for you, you really want to keep a hold of them. Offering a benefit such as salary sacrifice in exchange for a great car is one that comes near the top of the pile of great employee wants.
It isn’t just the employees that get a lower tax bill through the scheme. These savings come through having to pay lower corporation tax or national insurance contributions due to a lower number on the employee wages.
ESG (Environmental, Social and Governance) are the three pillars when it comes to company reporting obligations. The environmental part obviously has a focus on climate change, waste and pollution. Offering a salary sacrifice scheme for electric cars shows that the business is dedicated to reducing the carbon footprint and CO2 emissions. Being seen as an environmentally friendly company is also a benefit with customers making green credentials an increasingly important factor in choosing the businesses they use.
The world of business is highly competitive. Retaining the best staff and saving money are important factors that companies pay attention to. Offering a scheme which will increase the happiness of employees while also giving your company big tax breaks just makes sense.
On top of this, there is also the environmental factor. Making green policies a priority will raise the profile of the business in the public eye and should also make you feel good too. Improving air quality and making life better is a good thing. A really good thing.
Whether you are an employee or an employer, the salary sacrifice scheme is something that you should be looking at. If your business doesn’t currently offer this benefit, then this is a conversation that you should be having.
*information correct as at 31/01/2024