What Is Salary Sacrifice Car Scheme?

Salary sacrifice is an arrangement in which an employee agrees to give up a portion of their future salary in exchange for the employer providing a non-cash benefit, such as a company car. Just like the well-known ‘Cycle to Work schemes’, employees can sacrifice a fixed amount of their salary each month to put towards a brand new car. A salary sacrifice vehicle is a car you lease from a third-party supplier as agreed with your employer, but it’s important to note that the vehicle will be your responsibility to maintain and not your employers. Let’s explore the benefits of the salary sacrifice car scheme.

Benefits of a Salary Sacrifice Car Scheme

1. No Ties

There are no extra charges if you decide to terminate your agreement prematurely. This means that you’re not tied in, even if your circumstances do change.

2. Your Dream Car

You can customize your brand new car, get the brand, model line and styling you desire all for a lower price than if you were to buy personally.

3. Employer Benefits

If you’re purchasing a new car with your employer, this will usually come with a whole host of essential perks, such as insurance, breakdown cover, roadside assistance and servicing and maintenance discounts. Employees will also have access to lots of different savings through business discounts and the savings on tax and national insurance contributions. A salary sacrifice scheme saves you money on your income tax as the amount of tax you pay is linked to your salary. The higher your salary, the more tax you pay!

4. EV Savings

You can get more savings with an all-electric vehicle, as an employee you’re not taxed on the salary you give up. However, you will be required to pay Benefit in Kind tax (BIK), which for EVs is just 2% up until 2025.

5. Ditch The Deposit

Another great saving is that you do not need to put down an initial payment with the Salary Sacrifice Scheme, meaning you can get started right away. Paying the vehicle in installments via your salary package also spreads the cost, saving you from forking out a large lump sum.

6. Fair Deal

In most workplaces there is a hierarchal process which determines which employees are eligible for a company car. But with this scheme, anyone can purchase a vehicle regardless of their seniority, which promotes fairness in the working environment and happier staff.

Does your employer offer the Salary Sacrifice scheme? Find your dream car, check out our model range! Alternatively, speak to our expert team of Local Business Development Managers for more information.