Benefits of Salary Sacrifice
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BENEFITS FOR AN EMPLOYEE
A brand-new car every 2 or 3 years.
Employees will be eligible for a new car every 2 or 3 years, depending on their contract type. Whilst there is the option to purchase at the end of the agreement, by upgrading regularly, employees can stay up to date with current vehicle technology as well as the latest battery ranges for electric and hybrid models.
Big savings on National Insurance and Income Tax.
One of the main advantages of applying to a Salary Sacrifice Scheme is that an employee will be eligible to have the vehicle rental deducted from their pay before National Insurance (NI) and Income Tax is deducted. This can save upwards of £200 per month depending on the class of the car.
By choosing an electric car, these employees will also see significant savings in BiK (Benefit in Kind) rates, because from April 2022 electric cars attract a BiK rate of only 2% of the rental value.
Everything is included, except fuel/charging.
The Salary Sacrifice Scheme takes the hassle out of motoring. Comprehensive insurance, servicing, repairs, tyre replacements/repairs, comprehensive breakdown cover and road tax are all included in the monthly rental. This allows for easy budgeting because most of the time the only additional expense employees will face is the cost of fuel or charging - that's it.
When the vehicle comes up for servicing or needs repairs, there is simply one number for the employee to contact to arrange everything, at no extra charge.
No deposit or credit checks.
To sign up for the scheme, employees do not need to have a deposit ready, or a large sum saved for an initial rental. All the monthly rentals are the same, starting in month 1 and ending in month 24 or 36, depending on the term chosen. At the end of the contract, if the car is handed back, the employee can take out a new agreement without needing to worry about large payments being made.
Because the vehicle is associated with the business, there is also no need for the employee to undergo a credit check, saving a hard search on their credit history and potential disappointment.
BENEFITS FOR AN EMPLOYER
Encourage a 'green initiative' for your business.
With employees increasingly looking for organisations with a carbon footprint initiative, the Salary Sacrifice Scheme can bolster your approach. Given the lower BiK rates on electric vehicles (2% from April 2022), this scheme is a great way to encourage your employees to go electric whilst also making considerable savings. In turn, this will encourage a fleet of low-emitting vehicles that help work towards a sustainable future for your business.
Provide an incentive to existing, new and potential employees.
Encourage loyalty by offering your employees the chance to acquire a brand-new car - fully insured and maintained - with considerable savings over traditional personal finance methods. The scheme may also benefit in recruiting new employees, who might be looking for an employment package with several benefits.
Improve your brand image and customer perceptions.
If employees regularly travel for the business, this scheme can help improve your brand image by providing them with the latest brand-new cars, which ultimately are a representation of the company. A fleet of new cars can echo success and provide a strong outlook on your business.
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