0330 174 6768 enquiries@salsac.co.uk
What is Car Salary Sacrifice?
Car salary sacrifice is a type of employee benefit available in the UK. It enables employees to exchange part of their salary for a leased company car. This means that the employee pays a reduced amount of Income Tax and National Insurance contributions on the exchanged salary. The employee then pays Benefit in Kind (BIK) on the car benefit, which is usually lower than the amount of tax they would have paid on the exchanged salary. This can result in significant savings for the employee and provide them with the benefit of a fully maintained lease car.
How Can I Save with a Salary Sacrifice Car Lease?
A salary-sacrifice car lease can potentially save you money on taxes and National Insurance contributions. Under a salary sacrifice arrangement, you agree to give up a portion of your gross (pre-tax) salary in exchange for the use of a company car. Because the car is classed as a benefit, you will not pay Income tax or National Insurance contributions on the portion of your salary that you sacrifice. The amount you can save with a salary sacrifice car lease will depend on your specific circumstances, such as your salary and income tax bracket.
It's always best to consult with a financial advisor to learn about the specific savings you could expect in your personal circumstances.
No Deposit
Required
Payments commence after you receive the vehicle.
Full Maintenance
Included
Full maintenance and servicing is included with every lease car.
No Employee Credit Checks
Employee's credit score is not affected.
Brand New
Electric Cars
All cars are delivered brand new direct from approved UK dealers.
Vehicle Insurance Available
Additional, fixed fee fully comprehensive insurance is available.
Fully Fitted EV Charge Points
An optional home charger can be included in the salary sacrifice.
Get Started with a Car Salary Sacrifice
The Zero-Emission Vehicle (ZEV) Sustainable Mandate in the UK
The mandate is a transformative policy introduced by the UK government to combat climate change and reduce greenhouse gas.
If you are looking to acquire a car for personal use, car lease salary sacrifice can be a great option.
The grey fleet, consisting of employee-owned vehicles, not only increases an organisation's carbon footprint but also exposes employers.
The Tesla Model 3 is a high-quality compact electric sedan that was first introduced to the UK in 2017.
In the face of a challenging cost of living crisis, employees around the UK are feeling the strain on their finances.
Electric cars have become increasingly popular in recent years, as concerns over climate increase.
Alexa Young, London
“Great company, explained everything to both me and my staff."
George, London
“Great prices, five Stars, really know their stuff."
Jacob Pedley, Bristol
“Finally a Salary Sacrifice company that understand both the businesss needs and employee requirements."
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What is a Car Salary Sacrifice?A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, in return for a non-cash benefit. Salary Sacrifice enables an employee to use a portion of their gross salary before Income Tax and National Insurance (NI) is deducted to pay for a brand-new lease vehicle for a set period.
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How is Benefit in Kind (BIK) calculated?BIK is calculated based on the P11d value of the vehicle, its fuel type and CO2 emissions. For more information please refer to the HMRC BIK calculator https://www.gov.uk/tax-company-benefits/tax-on-company-cars
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What is the car salary sacrifice process?Company signs up and SalSac assists with scheme rollout Employee received a quotation for their chosen vehicle Funding is secured, paperwork completed & vehicle is ordered Home charger, if chosen, is installed Vehicle Insurance set up, if included Vehicle delivery is arranged for a convenient date Addendum to employment completed prior to vehicle delivery Salary deductions begin after delivery of the vehicle
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How does the car salary sacrifice scheme benefit employees?One set monthly salary deduction can include a brand-new vehicle, fully comprehensive motor insurance, vehicle servicing, maintenance and repair, breakdown cover, road fund licence and a home electric car charger if required. Tax & NI savings - as payment is taken from the employee’s gross salary via payroll, they benefit from Tax and National Insurance savings (typically 30-50% savings for an electric vehicle) making the rental substantially less than a Personal Contract Hire (PCH) agreement. No deposit or employee credit check Low Benefit in Kind (BIK) payable for electric vehicles. Current BIK rates on an electric car are 2% in the 2022/23 tax year, and are being held at this rate for a further two years.
Car Lease Salary Sacrifice Scheme
A Salary Sacrifice Car is an innovative technique here in the UK that allows an employer's staff to surrender part of their salary in order to lease a brand-new car for themselves. This scheme is growing in the UK and is popular among employees who want to save on taxes, and for those who want to spread the cost of a car with monthly instalments. A Salary Sacrifice is also suitable for employees who want to move away from the restrictions of a traditional company car scheme and for those looking to quickly move from petrol and diesel vehicles to both PHEV and all-electric cars.
The electric car salary sacrifice scheme is structured exactly the same as a typical salary sacrifice, however, the UK government have adjusted the benefit in kind or "BIK" payable to coerce more employees into leasing electric cars over petrol, diesel and hybrid vehicles. Simply explained, due to a low, 2% Benefit in Kind Tax, leasing an all-electric car through a Salary Sacrifice scheme or SalSac can save you upwards of 40% when compared to a traditional lease deal. Petrol, diesel and hybrid cars attract a higher benefit in kind meaning that these cars are not as financially attractive as full electric cars.
Here at SalSac, we are proud to offer the UK's most accurate car salary sacrifice calculator which quickly generates a full customer quotation. Once set up SalSac's automated system is carefully designed to make sure that all quotations are as accurate and comprehensive as possible giving you peace of mind and the confidence that you're getting the best deal in the marketplace as an employee.
Here at SalSac we also offer additional bolt-on products that can also be salary sacrificed. These optional products and services can increase tax savings whilst spreading the cost over the term through the same monthly payments. Currently, here at SalSac we optionally offer a fully fitted electric car home charge point and all-inclusive, fixed-fee vehicle insurance with up to 2 additional drivers.
Salary Sacrifice Schemes are approved and recognised by the UK Government making it completely legal and standard accounting practice. As an employer offering a car salary sacrifice, you will, of course, need your employee's consent to change their employment contract to include any Salary Sacrifice alterations. Additionally, however, a car salary sacrifice must not reduce the employee's earnings underneath the national minimum wage. For more information please visit the Government Website which provides additional guidance regarding the terms of a salary sacrifice arrangement, the effect on tax and National Insurance contributions and much more.
So what are the disadvantages of a Car Salary Sacrifice? Well, quite honestly there aren't many. Your take-home salary will be reduced due to the fact that you are using it to lease a car but due to the potential tax savings, this could be much less than leasing the same car personally. As with all leased cars, the total driving mileage permitted is limited within the contract. Please make sure you have considered your annual required mileage at the quotation stage to ensure the contract suits your needs. Additionally, please check the lease contract for the excess mileage amount, normally presented as a pence per mile figure. This is the amount you will pay per mile if you exceed the stated mileage within the contract. . For example, if your excess pence per mile is 7.5p then an additional 1000 miles would cost £75.00. Although some shy away from longer contracts they do generally offer better value for money. Here at SalSac, the longest contract we offer is 48 months or four years. Apart from these minor points and a little added paperwork, a Car Salary Sacrifice is a fast, efficient and affordable way to lease a brand-new electric car. Here at SalSac, the majority of our customers save between 20% - 45% on their leased cars and that's not including the additional fuel savings that are made when switching from a petrol or diesel car to an electric car.
For any additional information please visit our Knowledge Hub and Frequently Asked Question pages or of course call our expert team on 0330 174 6768.