What is it?
Salary sacrifice is an attractive, yet tried and tested method of delivering a tax efficient benefit to employees, at little or no cost to their employer.
It enables an employee to drive a brand new, cost effective electric car for a great deal less than if they had leased it privately
The employer leases a tax efficient zero emission electric car, which it provides to the employee as a company car in return for the salary sacrifice.
As the cost of the car is deducted from the employee’s gross salary, income tax and National Insurance Contributions (“NIC”) are based on the lower, revised salary, thus reducing the income tax and NIC the employee pays each month
As sizeable VAT savings may also be available, the employee can access green, zero emission cars at a fraction of their normal cost, and employers also benefit from potentially significant monthly NIC savings.
And for employers who operate a grey fleet, because increasing company car tax on traditional petrol and diesel cars has encouraged drivers to take the cash alternative, a salary sacrifice scheme is an ideal way to reduce Duty of Care risk and reduce the company’s carbon footprint.
