Fleet News

Survey reveals low tax company cars keep salary sacrifice inflation at bay

Eight out of 10 employees would sacrifice a portion of their salaries to opt into a company car scheme, according to a survey by Lex Autolease.

'Grey fleet' drivers, who use their own car for business use, were asked if they would opt into a 'salary sacrifice' scheme if their current car needed
replacing. 78% said they would take up the offer if it included a competitive monthly lease cost along with tax savings.

"The beauty of salary sacrifice is that it meets both of those financial requirements handsomely", explains Andrew Hogsden, senior manager of Lex Autolease's Strategic Fleet Consultancy.

"Firms can pass on the benefits of their buying power to employees and both parties also share in the National Insurance savings. Given that NIC rates were upped in April, salary sacrifice is now an even more attractive proposition", he adds.

Lex Autolease says that, although salary sacrifice is relatively new to company cars, similar schemes have been applied to employee pensions and childcare benefits with significant success. The arrangement, which sees employees forgo a portion of their salary in lieu of benefits, reduces National Insurance costs.

Hogsden says: "Firms may be inclined to withdraw or cap benefits during difficult economic periods, but salary sacrifice is a great cost-effective way to do the very opposite. It's a superb tax saving device, which by its very nature helps avoid wage price inflation.

"But there are other benefits too. Putting more employees into a company car scheme is good for retention, recruitment and morale. The running costs are manageable too because the scheme comes into its own when applied to frugal, low CO2 cars. Vehicles that firms and their customers would much rather see them drive, than a clapped out banger."

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