Salary sacrifice giving employees access to their first new car

Salary sacrifice schemes for cars are giving many employees the opportunity to have a new vehicle for the first time.

Fleet Evolution found that more than 80% of eligible employees, who joined one of its salary sacrifice car schemes, were selecting their first ever new car.

Most were also 20%, not 40%, taxpayers - dispelling the myth that salary sacrifice car schemes are only effective for well paid staff who regularly change their cars. 

In the overwhelming majority of cases, employees joining a Fleet Evolution car scheme also chose an electric car - just 2% selected a hybrid.

“There is this misconception that salary sacrifice car schemes only work for very well-paid employees,” said Fleet Evolution founder and managing director, Andrew Leech.

“But that is not the reality. Salary sacrifice has made a new car affordable for many lower paid employees, and in many cases for the first time.”

“Even the lower paid can benefit from a scheme’s advantages, which include all servicing, tyres, breakdown cover, road fund licence and fully comprehensive insurance,” he added.

Leech said that the Government’s recently announced electric car grant (ECG) of between £1,500 and £3,750 would have a “dramatic impact” on the affordability of electric cars within salary sacrifice car schemes, making them more accessible still.

“We calculate that the ECG will make electric cars around £50 net cheaper per month,” said Leech. “But at the moment we cannot advise customers as to which manufacturers vehicles will be included within the grant as we are as much in the dark as they are.”

The most popular electric car for first time buyers/lessees through the Fleet Evolution scheme is the MG4.

Fleet Evolution calculates that employees earning as little as £32,000 can comfortably afford an electric car on salary sacrifice.

Current rules for salary sacrifice schemes state that employees cannot enter into a scheme for any assets if the amount of salary sacrificed takes their take-home pay below the minimum living wage.

However, Fleet Evolution has been lobbying Government to have the rules governing salary sacrifice and the lowest paid amended, arguing that the current laws discriminate against the very people they are designed to protect.

Leech explained: “We would like Government to make a minor adjustment to the current rules with a caveat which states that the minimum living wage threshold remains in force, unless the employee opts for and agrees to a beneficial salary sacrifice arrangement which takes them below that level.

“That would open up electric car ownership to even more prospective employees.”