Salary Sacrifice
What is Salary Sacrifice?
A Salary Sacrifice scheme allows employees to drive a brand-new electric vehicle by exchanging part of their gross salary in return for a lease. Because the payments are taken before Income Tax and National Insurance are applied, employees can often enjoy significant savings compared with funding a vehicle privately.
For employers, Salary Sacrifice has become one of the fastest-growing workplace benefits. As well as supporting employees with the transition to electric vehicles, it can help reduce Employer National Insurance contributions and strengthen your employee benefits package.
With Benefit-in-Kind (BiK) tax on electric vehicles remaining low, Salary Sacrifice continues to be one of the most tax-efficient ways to drive a new electric car.
How Does It Work?
Setting up a Salary Sacrifice scheme is often much simpler than businesses expect.
We'll work with you to understand your business, explain how the scheme operates and help you implement a solution that's right for your organisation.
Once your scheme is in place:
- Employees choose a brand-new electric vehicle from a wide range of manufacturers.
- The monthly lease cost is deducted from their gross salary before Income Tax and National Insurance are applied.
- Employees benefit from reduced monthly motoring costs, while employers may also make savings on National Insurance contributions.
- Employees enjoy a brand-new electric vehicle, with many agreements also including servicing, maintenance, tyres and breakdown cover.
Throughout the process, Rayner Smith Finance is on hand to guide both employers and employees, making the scheme straightforward to introduce and manage.
1.
Your Business Joins the Scheme
We'll work with you to understand your business and help set up a Salary Sacrifice scheme that's suitable for your workforce.
2.
Employees Choose Their Vehicle
Employees browse a wide range of electric vehicles and select the one that best suits their needs.
3.
Salary is Adjusted
The agreed monthly amount is deducted from the employee's gross salary before tax and National Insurance.
4.
Employee Drives Away
The employee enjoys a brand-new electric vehicle while benefiting from tax-efficient motoring.
Why Choose Salary Sacrifice?
For Employers
- Offer an attractive employee benefit.
- Help attract and retain talented employees.
- Potentially reduce Employer National Insurance contributions.
- Support your business's sustainability and environmental objectives.
- Minimal administration with ongoing support from Rayner Smith Finance.
For Employees
- Tax-efficient access to a brand-new electric vehicle.
- Lower monthly costs than many traditional finance options.
- No large upfront deposit.
- Road tax included.
- Manufacturer warranty.
- Servicing, maintenance and tyres can often be included.
- Protection from future vehicle depreciation.
Salary Sacrifice can be suitable for businesses of many sizes.
Whether you're employing ten people or several hundred, we'll help you understand whether a scheme is appropriate for your organisation and explain how it works.
Employees can choose from a wide range of brand-new electric vehicles from many of the UK's leading manufacturers. Whether they're looking for a compact hatchback, family SUV or executive vehicle, we'll help them find a car that suits both their lifestyle and budget.
It can do, depending on how your scheme is structured. We'll explain the implications before implementation.
Many Salary Sacrifice agreements include servicing, maintenance, tyres and breakdown cover, depending on the provider and chosen package.
Yes. Many SMEs now offer Salary Sacrifice schemes as part of their employee benefits package.
There are a number of options depending on the circumstances and the scheme rules. We'll explain these before your scheme goes live.
A Salary Sacrifice scheme is a valuable employee benefit that can help businesses stand out in a competitive recruitment market. Offering employees access to a brand-new electric vehicle through a tax-efficient scheme can improve job satisfaction, support staff retention and demonstrate your commitment to employee wellbeing.
In many cases, yes. Because employees exchange part of their gross salary, employers may benefit from reduced National Insurance contributions. The level of any saving will depend on individual circumstances, and we'll be happy to explain how this could apply to your business.
Salary Sacrifice encourages the adoption of electric vehicles, helping businesses reduce their environmental impact while supporting wider sustainability and net zero objectives. It's an effective way to demonstrate your organisation's commitment to greener transport without requiring employees to fund an electric vehicle privately.
Insurance arrangements vary depending on the Salary Sacrifice scheme. Some schemes include fully comprehensive motor insurance as part of the monthly cost, while others require the employee to arrange their own cover. We'll explain exactly what's included before any agreement is finalised.
As Salary Sacrifice reduces an employee's gross salary, it can affect benefits that are calculated using salary, such as pension contributions, life assurance or statutory payments. The impact will depend on your employer's policies and individual circumstances, so we recommend seeking independent financial advice if you are unsure.