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8 Reasons Why A New Car Is Worth The Salary Sacrifice

Are salary sacrifice car schemes worth it?

For the uninitiated, the salary sacrifice car scheme is a relatively new innovation in vehicle provision that allows virtually any employee to be eligible to drive a company car. As a result it is causing quite a buzz in companies across the UK, both in the boardroom and the workplace.

Salary sacrifice is quite simply an arrangement where an employee gives up part of their salary in return for a non-cash benefit; in this case a brand new company car.

But are salary sacrifice schemes worth it? To help you get to grips with salary sacrifice schemes and how they could work for you we explore eight top reasons why salary sacrifice car schemes are worth it.

1. Join the growing club offering employee car schemes

Salary sacrifice offers so many benefits that it is estimated there are now over 150,000 cars being provided through these schemes; that’s around 11.5 % of all the company cars on the UK’s roads. And it’s becoming more popular by the day.

Here are just some of the organisations who support and promote the scheme to their employees: Santander, KPMG, IBM, Triumph Motorcycles, Airbus Industries, Aston University, MAN Truck & Bus UK Ltd, North Yorkshire County Council and Cable & Wireless.

2. Lower income tax and National Insurance Contributions

Probably the single biggest reason. This scheme reduces both income tax and National Insurance Contributions (NICs). This is because some of the employee’s salary shifts from cash, (on which PAYE tax and NICs are due), to non-cash benefits, (that are wholly or partially exempt from tax and NICs.)

Company cars arranged under a salary sacrifice scheme do however attract the Benefit-in-Kind (BIK) tax, but even so, by making a careful vehicle choice it still results in an overall saving.

For the company, the amount of NICs and corporation tax payable is also reduced. While you still have to pay NICs on the car, this is a lot less than the employer NICs that would have been paid on the salary.

funding for business

3. A new car at lower cost

Not only will employees take delivery of a brand new car at a far lower cost than if they were to buy a car privately; they will also benefit from many of the following: access employer’s corporate purchasing terms on new vehicles, leasing periods from two to five years, no deposit, fully inclusive package including servicing, insurance, tyres, accident management, no credit checks, fully comprehensive insurance (including all business travel), maintenance of the vehicle including all servicing, MOT after three years, batteries, exhausts and tyres, early termination insurance (ETI), roadside assistance, annual Road Fund Licence.

4. A valuable retention, engagement and motivational tool

Employee car schemes are an extremely attractive proposition for employees who previously have been ineligible for a company car. As a result it can form part of a company’s benefits package in order to attract new employees and also retain existing staff.

5. Help the environment and improve your green credentials

Salary sacrifice offers the biggest savings when buying a low emission car, as they have the lowest rate of Benefit-in-Kind (BIK) tax. As a result your company can use the scheme to promote more environmentally-friendly vehicles and reduce your company’s carbon footprint.


6. Improve the duty of care to your employees

Your company can ensure that the drivers of non-company controlled vehicles used for business purposes, (a.k.a. the ‘grey fleet’), are behind the wheel of a new, low-emission, well-maintained and comprehensively insured vehicle. This both reduces the risk to the driver and as a result enhances your duty of care responsibilities.

7. Enhanced corporate responsibility

In addition to enhancing your company’s green credentials, decreasing its carbon footprint and reducing ‘grey fleet’ risk it also sends out a strong signal with regard to your overall corporate responsibility.

8. Little or no additional administration to your company

Choose the right leasing company and they will handle all the administration for you, with many offering user-friendly web portals which offer a fully automated quote, order and authorisation process.

The leasing company should provide a full support package to assist you in understanding the tax implications of the arrangements and how to obtain tax clearance from HMRC. Furthermore any reputable company will be aware of any changes in the tax system that could impact on the viability of the scheme.

So are salary sacrifice schemes worth it?

These eight steps are just a brief outline of the many benefits of an employee salary sacrifice car scheme, a far-reaching and innovative scheme that enables you to target your entire workforce and save valuable time. With a scheme that will not only boost employee retention but also helps you to build a greener, more reputable business, it seems that salary sacrifice car schemes are worth the small amount of time and effort required to put one into place.

For a no obligation discussion about how these car schemes can work for your organisation, please get in touch.

Maxxia Lifestyle Lease

2020-04-19T09:07:58+00:00October 12th, 2013|Categories: Cars, Salary Sacrifice, Vehicle Finance|


  1. Car dealers in Glasgow September 22, 2021 at 12:51 pm - Reply

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  2. Car Dealers in Lancaster September 15, 2021 at 10:42 am - Reply

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