• How salary sacrifice can help turn grey fleet green

How a salary sacrifice scheme can make your grey fleet leaner and greener

The company car has been an integral business component for decades, but these days businesses are facing a number of issues have raised questions over its traditional role.

To start with, many organisations are realising that in the age of the information superhighway, there is a reduced the need to travel up and down the UK’s highways and byways. Furthermore the cost of administering company cars has made many companies less eager to offer this ‘perk’ of the job; while employees are increasingly reluctant to take up the offer because of the, potentially high, Benefit-in-Kind (BIK) tax.

For employees who only require the occasional business trip, there are other alternatives such as pool cars, car sharing or even public transport. But ultimately for employees who need to travel from time to time, paying them a fixed mileage allowance for the use of their private car is fast becoming the most convenient option in terms of both administration and cost.

The rise of the grey fleet

Slowly but surely, many companies are now paying mileage rates to employees who use their own car for business. It not only makes good financial sense (assuming that employees aren’t covering 35,000 miles a year), but many employees are more than happy to use their car for business.

However there are a number of issues relating to the grey fleet that need careful management; which is where the Salary Sacrifice scheme can come to your assistance. Salary Sacrifice, in a nutshell, is an arrangement whereby an employee gives up part of their salary in return for a non-cash benefit; in this case a brand new car.

Below are just some of the many reasons why Salary Sacrifice can help your organisation to make your grey fleet leaner, cleaner and ultimately greener.

1Reduce taxes

Salary Sacrifice reduces both income tax and National Insurance Contributions (NICs) as some of your 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.)


improve image with salary sacrifice
One of the problems associated with the grey fleet is that companies rely on employees to be in possession of a reliable, well-maintained and efficient vehicle, which unfortunately isn’t always the case.

Ultimately employees are also representatives of your organisation, which means that the car they drive is a reflection of your company image; with Salary Sacrifice you can rest assured that your employees will be driving a car that won’t look out of place in your client’s car park.


Unlike a company car which is replaced every 2-3 years, many private owners hold on to their vehicles for a lot longer; the older a car gets, the more unreliable it becomes.keep drivers on the road with car salary sacrifice

With Salary Sacrifice not only are the cars new, they also automatically come with a fully-inclusive package that generally includes: maintenance of the vehicle including all servicing, MOT after three years, batteries, exhausts and tyres, roadside assistance, accident management, and comprehensive insurance which includes all business travel.

4Duty of care

avoid duty of care issues with salary sacrificeIf employees’ cars are used for business travel, your company still has a duty of care to ensure that the car is fit for the purpose, has a valid MOT (if applicable), is insured for business use and that the employee has a valid driving licence.

With Salary Sacrifice, you are assured that employees 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 while also sending out a strong signal with regard to your overall corporate responsibility.

5Greening the grey

Green practices are fast becoming a key issue for all organisations. With the Salary Sacrifice scheme the biggest savings come with a low-emission car, as they have the lowest rate of BIK tax. As a result your company can use the scheme to promote more environmentally-friendly vehicles and reduce your company’s carbon footprint.

6Retain and motivate employees

Salary Sacrifice is an extremely attractive proposition for employees and as a result can form part of a company’s benefits package in order to attract new employees, while also motivating and retaining existing staff.


Salary Sacrifice offers so many benefits that, according to recent research, a third of all fleets are now offering a salary sacrifice scheme.

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2020-04-19T09:08:41+00:00January 2nd, 2014|Categories: Cars, Contract hire, Salary Sacrifice, Sustainability, Vehicle Finance|

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