A NEW salary sacrifice scheme has been launched by Fleet Alliance aimed specifically at SME firms.
The leasing provider says many SME businesses may not be aware of the taxation and National Insurance benefits by providing electric vehicles available under such an acquisition method.
According to Fleet Alliance, salary sacrifice is an ideal way to provide employees who would not normally qualify for a company car – or those who have opted out in favour of a cash allowance – with ready, cost effective access to fully maintained, zero emission vehicles at no extra cost to the business.
Further cost savings are available thanks to the leasing broker’s multi-bid funding solution, which employs competitive tendering amongst a panel of funders to ensure the maximum value is delivered to employer and employee by selecting the lowest cost – a facility not normally available to smaller businesses, it says.
Salary sacrifice is particularly tax-effective for zero emission electric cars, because benefit in kind taxation rates are pegged at 1% this tax year, and then to 2% until 2024/25. Drivers receiving a salary sacrifice EV pay the exceptionally low BIK – which also lowers the NIC payable by the employee. The savings are significant, particularly when compared with an employee having to pay personally for a personal contract hire lease.
Example: Volkswagen ID.3 On Fleet Alliance Salary Sacrifice – 20% Tax Payer
Employee saving
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Model: Volkswagen ID.3 107kW Life Pro 62kWh
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Monthly gross sacrifice: £523
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Monthly net sacrifice: £365
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Monthly cost of PCH: £566
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Employee saving over a 36 month term: £7236
Employer saving
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Model: Volkswagen ID.3 107kW Life Pro 62kWh
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NIC saved on salary sacrifice: £72
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NIC paid on company car: £6
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Employer saving: £66
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Employer saving over a 36 month term: £2376
Under the new salary sacrifice scheme, the new ID.3 would cost a 20% taxpayer £365 per month compared with £566 for the same vehicle under a personal contract hire lease paid by the employee.
The monthly saving is £201, achieved through savings in Income Tax, National Insurance Contributions (NIC) and Value Added Tax (VAT), offset marginally by a small Benefit-in-Kind (BIK) tax charge.
The employer also saves with lower NIC costs.
Fleet Alliance says that, under its SME focused salary sacrifice scheme, the employee effectively leases the car for two, three or four years with no deposit, and all costs, including maintenance, Vehicle Excise Duty, insurance and breakdown cover, included within the employee’s monthly salary sacrifice.
Meanwhile businesses gain by providing an attractive employee benefit without increasing costs, as well as generating monthly savings in NIC, encouraging employees into cleaner, better maintained cars and reducing their risk from poorly maintained grey fleet vehicles.
The savings become even more extensive for employees at the 40% marginal rate, Fleet Alliance providing the example of over £15,000 for a Tesla Model 3.
Benefits for SMEs
“We believe our new salary sacrifice scheme offers benefits for businesses of all sizes”,” explains Managing Director Martin Brown (right).
“But it will resonate especially with SMEs for whom this type of scheme has not been widely available. Its advantages of lower leasing costs, full maintenance, fully comprehensive insurance and the option to tailor lifestyle protection offer particular value to SMEs.
“We believe now is the perfect time to launch such a scheme for all our customers and prospects as it takes maximum advantage of the prevailing tax regimes and the growing movement to electrification.
“And it provides an excellent opportunity to reduce your company’s carbon footprint and provide employees with a brand-new electric vehicle at minimal benefit-in-kind impact.
“To demonstrate its effectiveness, we provide exclusive access to our easy-to-use online calculator that helps demonstrate the savings’ potential available to both employers and employees for all new models available.
“As a business we are fully committed to being zero emission by 2030 and we know that many of our customers have made, or are moving towards, the same commitment. This new scheme will play a valuable role in helping them achieve that objective.”
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