Car salary sacrifice can be a great way to provide employees with a new car while also reducing your company’s tax bill. It works by the employee sacrificing a portion of their salary in exchange for the use of a new car. The amount of salary sacrificed is then used to offset the cost of the car. Meaning that your company pays less tax.
Benefits to choosing a car salary sacrifice
There are a number of benefits to choosing a car salary sacrifice for your employees:
1. It can help to attract and retain good employees.
2. It can be used as a way to reward employees for their loyalty and service.
3. It can help to reduce your company’s tax bill.
4. It can help to improve employee morale.
5. It can help to reduce your company’s environmental impact.
If you are considering offering car salary sacrifice to your employees, then there are a few things you need to bear in mind. Firstly, you need to make sure that the scheme is offered by a reputable and reliable provider. Secondly, you need to make sure that the scheme is structured in such a way that it benefits both your company and your employees. If you are interested in a salary sacrifice scheme, Fleet Evolution has industry-leading deals and services within the field. Speak to them today: https://www.fleetevolution.com/
Electric cars on Salary Sacrifice?
The government’s changes to company car tax in April 2020, saw a dramatic increase in the benefits of electric cars on salary sacrifice.
Pre-April 2020, cars with emissions below 50g/km were taxed at a rate of 10%. An employee sacrificing £100 P.M towards the cost of their car would save just £10 in income tax & National Insurance.
However, from April 2020 onwards, cars with emissions below 50g/km are now taxed at a rate of 0%. An employee sacrificing £100 per month towards the cost of their car would save £24 in income tax National Insurance.
This means that electric cars on salary sacrifice are now much more tax-efficient than they were before, and are an increasingly attractive option for employees.
If you’re considering offering car salary sacrifice to your employees, then we recommend speaking to a specialist provider who can advise on the best way to structure the scheme.
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Is it better to lease a vehicle?
The short answer is “no”.
While it’s true that leasing a vehicle can be cheaper than buying one outright, it’s important to remember that you’ll never actually own the vehicle. This means that at the end of the lease period, you’ll have nothing to show for your money.
In contrast, with car salary sacrifice, you’ll own the vehicle outright at the end of the agreement. This means that you can sell it, keep it for yourself, or use it as part payment towards a new car.
Another important consideration is that with leasing, you’re effectively renting the vehicle from the leasing company. This means that if you damage the vehicle, you’ll be liable for the repairs. With car salary sacrifice, you own the vehicle, so any repair costs are your responsibility.
Finally, it’s worth bearing in mind that with leasing, you’re usually only able to choose from a limited range of vehicles. With car salary sacrifice, you can choose from any make or model of vehicle, meaning that you’re more likely to find a car that suits your needs and budget.
For these reasons, we believe that car salary sacrifice is a better option than leasing for both employers and employees. However, if you are looking for vans or larger commercial vehicles. Then leasing can be a good option. We recommend van leasing as a way to get vans for your business.