Salary sacrifice is a popular scheme for both employers and employees to save money. Employers can save on National Insurance (NI) contributions, while employees can benefit from a wide range of perks like full maintenance, servicing, tyres, and breakdown recovery, which are often included in the salary sacrifice package.
The vehicle of choice for this scheme is usually an electric car, as they have low benefit-in-kind rates that can result in significant savings for both parties. With the generous government benefit-in kind net zero subsidies - currently just 2% on net zero electric vehicles - salary sacrifice becomes an even more attractive option for those looking to make a clean electric vehicle transition.
Additionally, salary sacrifice is subject to VAT, which is fully reclaimable by the employer and can be passed on to the employee as a further cost-saving benefit.
It is important to note that salary sacrifice may not be the best option for everyone and that company car schemes or contract hire may offer more realistic cost-saving options. Contract hire is often the funding method of choice for companies and associations, as the effective rental is fully reclaimable.
If you are considering salary sacrifice, it is important to consult with experts who specialise in vehicle leasing, funding and finance. AVC has over 25 years' experience in this field and can provide you with an online comparison of every option on offer, as well as a savings summary on the car of your choice in a matter of seconds.