Fleet News

Dealer group launches salary sacrifice scheme

A franchised dealer group is believed to be the first in the country to capitalise on increasing corporate demand for salary sacrifice car schemes by launching its own initiative targeting employers and businesses throughout the UK.

Benfield Motor Group, which has 34 outlets across the north east of England, has developed the scheme, called Flexicar, in partnership with Newcastle-headquartered chartered accountants and tax advisers UNW.

The scheme is billed as ‘hassle-free’ and promising tax efficiency for employees as well as financial savings of
£100-£200 per month per member of staff versus the cost of an equivalent vehicle funded via a personal purchase scheme.

Meanwhile, Flexicar has been launched as evidence from other providers shows demand for such schemes to be at record levels.

For example, Hitachi Capital Vehicle Solutions recently announced its salary sacrifice fleet had reached 6,200 vehicles in 18 months and with just six clients.

Dealer margins under pressure

Benfield Motor Group has launched its scheme at a time when dealers’ new and used car margins are under pressure and franchises are generally striving to boost business by increasing service, maintenance and repair work.

Carl Moffett, Benfield Contract Motoring’s general manager, said: “We believe we are the first dealer group to develop a salary sacrifice scheme and certainly the first to work closely with a firm of professionals to make implementation much easier. 

We see Flexicar as adding to our rapidly-growing business-to-business offering. It also means that we can offer a significant amount of value to our customers over and above regular contract hire.

“Our business portfolio is growing rapidly and will soon represent nearly 50% of our overall new car activity.”

Benfield Motor Group is unable to forecast sales volumes through the scheme, but Moffett said in the wake of its recent announcement: “Uptake has been very exciting.”

The Retail Motor Industry’s National Franchised Dealers Association, which represents franchised car and commercial vehicle dealers in the UK, said it is unaware of any other similar scheme being launched by a dealer.

Director Sue Robinson said: “We are aware of salary sacrifice schemes for pensions as these schemes are used in many large organisations.

“This appears to be a unique offering by a dealer group. We do not see this as particularly linked to margins but more as a marketing tool for fleet business at a time when fleet sales have been sluggish.”

Flexicar is available to all organisations in the public and private sectors, irrespective of their number of staff.

Benfield and UNW said they will provide a complete package of support for both employees and employers throughout scheme implementation.

UNW said it has already executed most of the tax and legal work required in respect of implementation.

The organisation’s employment taxes partner Lee Muter said: “At a time when most private sector organisations are finding it particularly difficult to give salary increases, this is a tremendous hook to both attract and retain staff.”

The two organisations have spent a year designing what they call a ‘turn-key’ solution for employers and Muter added: “This is a cost-efficient salary sacrifice scheme for businesses and staff – a real win-win situation which is ideal for those who do not currently get a company car or cash allowance. For this reason, we expect the scheme to be highly popular.”

Flexicar, on average, is said to take two to three months to implement, depending on the size of the businesses. During that time, UNW and Benfield Motor Group say they will offer full project management and will assist employees in disposing of their current vehicles if required.

‘Savings are equivalent to 11% pay rise’

Benfield Motor Group calculates that employees can make savings equivalent to an 11% pay rise by opting for Flexicar, at the same time as potentially saving their employer money.

Salary sacrifice schemes work best when substituting pay for a taxable benefit at a much lower rate. In respect of cars, the largest savings for both employers and employees are gained when selecting low CO2 emission models.

Benfield has a portfolio of 14 car brands and says cars leased under the scheme in return for a monthly payment come with fully comprehensive insurance, full service, breakdown cover and roadside assistance.

The fact that UNW and Benfield Motor Group have already executed the majority of the tax and legal work required when implementing a car salary sacrifice scheme bears out a warning from Hitachi Capital when establishing a scheme.

Hitachi says salary sacrifice car scheme success is down to ensuring fleet, HR and finance departments work together to deliver a successful scheme for their employees.

A failure to achieve that joined-up approach means, according to Mike Belcher, Hitachi Capital Vehicle Solution’s head of sales, “schemes don’t stand a chance of working”.

See the March 21 issue of Fleet News for a feature on salary sacrifice take-up.


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Comments

  • Alastair Kendrick - 12/03/2013 11:41

    Can Benfield please explani how they get to these suggested levels of savings and whether these are at today's level of BIK or take account of tax increases on a company car year on year? I assume this also assumes the employee purchasing his/own car will get no dealer discount which is ofcourse unlikely

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