Employers are always looking for cost effective, flexible benefits packages to offer their employees. These benefits packages can be useful in helping to attract, retain and motivate your employees, and on top of this they can also see the employer paying less National Insurance Contributions (NIC’s) each year too. This is because if the employer offers a non cash benefit, such as a car, to the employee who sacrifices part of their salary, it will see this part not subject to Income Tax and NIC’s. Gross salary and cash allowances are normally subject to Income Tax and NIC’s This will also benefit the employee as they will consequently pay less tax and possibly less National Insurance each year.
Advantages for both Employer and Employee
These are known as salary sacrifice schemes, and a typical non cash benefit will be a company car. This can bring multiple benefits for both employer and employee, and is certainly something that you should consider as it can be cost neutral if properly structured. For the employer, in addition to lower NIC’s and motivating and attracting employees, a salary sacrifice car scheme brings benefits such as making new cars accessible for those that are not usually eligible, it can address “grey fleet” issues, encourage low emission vehicles to be used and can save money through reduced rental and pool car usage. The employee can benefit through getting a brand new car that is maintained and insured, which will give them peace of mind due to no unexpected breakdown costs.
Cost Effective, Tailored Salary Sacrifice Schemes
For the most cost effective salary sacrifice schemes along with the best choice in new, fuel efficient vehicles, it is important that you find companies that offer tailor made fleet finance and management services to UK businesses. This will include places such as Hitachi Capital Vehicle Solutions amongst a few others. Using these companies ensures that you get a scheme tailored to your particular needs, and this will make it worthwhile for both you are your employees. Generally these tailored schemes will include financing the vehicle, maintenance, insurance, breakdown cover, road fund licence and an accident management service.
Many progressive businesses are now using this scheme because of the attractive benefits that it poses for both the employer and employee. It can be very cost effective and allow you to give employees, some of whom may not usually be eligible a non cash benefit.