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How a Lease Car Salary Sacrifice Works
Learn the basics of how a lease car salary sacrifice works for both the employer and the employee.
The Car Salary Sacrifice Basics
For a car salary sacrifice to begin a business is required to offer it as an option or perk to its employees. Without the cooperation of the employer, no employee can salary sacrifice a car as the lease contract is technically a Business Contract Hire signed between the employer and a car leasing funder.
Although a company or employer can offer and manage a car salary sacrifice internally, generally companies use third parties such as SalSac to help administer their salary sacrifice scheme. Using SalSac means you benefit from not only discounts on lease cars but also the dedicated experience with the field and the bespoke systems and software which makes offering the scheme straightforward, manageable and hassle-free.
Once an employer has signed up with a Salary Sacrifice Provider their employees can receive quotations showing the estimated salary reductions for specific cars and packages. Here at SalSac, employees can also bolt on fixed-fee car insurance and fully fitted home chargers. These extras can increase the employee's savings even further still at no cost to the business. Many SalSac customers save upwards of 40% when compared to a personal lease.
What lease cars are best for a salary sacrifice?
The best cars to salary sacrifice are either all-electric cars or plug-in hybrid vehicles (PHEVs). The larger the electric range and the lower the CO2 output the lower the Benefit in Kind (BIK) the vehicle will attract when using Salary Sacrifice. Benefit in Kind (BIK) is a tax paid in relation to the total value of the vehicle leased and your tax bracket. With an all-electric car, the BIK is currently set by the government at only 2%. This means that the Income Tax and National Insurance savings made by the salary sacrifice far outweigh the cost of the BIK tax. For more information regarding BIK and how it's calculated read our Benefit In Kind Guide.
Why would an employer offer a car salary sacrifice?
Offering your salary sacrifice scheme with SalSac is an uncomplicated, cost-neutral perk that can be offered to existing staff to assist with staff retention or to attract new talent to a business. Offering an electric car salary sacrifice scheme is also a great way to help reach the company's green objectives. All salary-sacrifice cars powered by SalSac come with full maintenance packages included for the lease term. These packages generally included everything from standard vehicle maintenance and servicing to tyres and breakdown cover.
What are the benefits for the employee?
A salary-sacrificed electric lease car has many great benefits over personal leasing or traditional purchasing, especially in such a young and fast-paced electric car market.
No Employee Credit Checks
Tax and NI Savings
Brand New Electric Car
New Safety Features
Escape the High Petrol and Diesel Prices
Comprehensive Maintenance Package Included
Fully Fitted Home Chargers Available
Some Higher Earners can reclaim Personal Tax Allowance
Salary Sacrifice Disadvantages
With any process there can be downsides however here at SalSac we feel that the advantages far outweigh the potential disadvantages.
Benefit In Kind Payable (BIK) - Learn More
A Long Term Commitment
High Emission Cars can be Expensive
Unavailable if the Salary Sacrifice Brings an Employee under the National Minimum Wage
For more information please call our team on 0330 174 6768.
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