A new salary sacrifice scheme has been launched, which could attract hundreds of thousands of motorists who would not normally qualify for a company car into a new vehicle supplied by their employer.
Several major carmakers, including Vauxhall, Citroen, Renault, Fiat, Mazda and Seat, are already backing the online, fully automated scheme by offering additional support above normal volume-related bonuses.
Tuskerdirect, which developed the scheme, said manufacturers believe this is a way of capturing a new audience who would not normally be in the market for new cars.
The scheme allows an employee to surrender part of their salary in return for a non-cash benefit - in this case a new car.
Because the benefit cost is deducted from the employee's gross salary, before statutory deductions, he or she is able to save income tax and National Insurance contributions.
With the recent tax changes, salary sacrifice has become financially very attractive.
This has been further helped by additional manufacturer support.
“Employees will face a charge for Benefit-in-Kind taxation, but as the scheme promotes lower polluting cars, typically sub 120-160g/km, this is more than offset by the tax and NI savings,” explained Tuskerdirect managing director David Hosking.
www.salarySacrifice4Cars.com also enables an employer to provide the new cars at no cost and with little additional administration.
The sacrifice scheme also allows companies to address their grey fleet duty of care obligations as all the vehicles have mandatory full maintenance and comprehensive business-use insurance cover.
The sacrifice system took 12 months to develop and has been integrated with Tusker’s fleet management system, Fleetdesk3.
It is available online, via large benefit providers and is also been offered to lease companies under a white label service.
David Rawlings, formerly automotive consultant at Deloitte and now managing director of the Business Car Finance consultancy, said the new scheme is “a tremendous opportunity for employers to offer a great benefit to staff at no cost.”
Although he said that as a massive proportion of the savings enjoyed by employees are at the expense of the Treasury, companies must ensure complete compliance with tax rules.
“The principle is fine, but the devil is in the detail," he said.