Questions for launching a salary sacrifice scheme

Key questions for launching a salary sacrifice car scheme

1. How does salary sacrifice work?

Salary sacrifice schemes are where an employee gives up an amount from their gross salary in exchange for a non-cash benefit, such as childcare vouchers, pensions or a car. The employee saves the income tax and NIC, and the business makes savings on the amount that has been sacrificed.

It’s a great valued benefit for employees which allows employers to offer a competitive benefits package, which is essential for all good companies to offer. A salary sacrifice scheme is seen as key in aiding retention of talent and attraction of new staff.

For cars, employees also get a brand new, maintained car at corporate rates, and save most of the VAT they would pay on a personal lease. If only pure electric and ultra-low emission cars are offered there should be a significant overall saving for both employer and employee.

Salary sacrifice is a great way of encouraging drivers to adopt more environmentally friendly modes of transport, giving confidence to the industry that the environmental and economic benefits that it gives to the UK’s drivers is recognised by the Government.

2. What are the issues surrounding early-termination fees, maternity leave and what happens when an employee leaves their company?

Unlike many other traditional car schemes, Tusker* minimises risk for both employers and employees, with a full suite of protections available in the case of, redundancy, maternity, long-term sickness cover as well as several other lifestyle events, so neither party is penalised in the event of unforeseen circumstances.

3. What are the potential future tax/cost implications of benefit-in-kind tax increasing?

The certainty which Government has provided in fixing Benefit in Kind rates at 2% until 2025 and then small incremental rises thereafter, means that drivers can take advantage of the latest in green, clean, technology in these cars, while also making substantial savings in tax and NIC via a salary sacrifice scheme.

Tusker was involved in the BVLRA’s #seethebenefit campaign in 2022, which was successful in helping Government to keep BiK favourable as part of its plan to achieve Net Zero. The rises are minimal, which we feel will continue to encourage drivers to make the switch from petrol or diesel cars which have BIK rates upwards of 20%.

Be clear on why you’re introducing it 

4. What do companies need to be mindful of now that Salary sacrifice is increasingly being used to replace traditional company car schemes?

Salary sacrifice schemes are frequently more affordable for many employees than a traditional company car scheme, especially if the policy favours EVs and low emission vehicles. As a result, these schemes can often be extended to far more employees than was previously possible. It is worth viewing a salary sacrifice car benefit scheme as an inclusive, rather than exclusive benefit, from the outset, which may necessitate re-looking at pre-existing company policies around eligibility.

Choosing the right provider is key for many companies. One which works with the major employee benefits platforms can be a bonus, as is ensuring their experience in running large salary sacrifice fleets encompassing all of the additional services included with the car. A focus on great customer service can make all the difference for your employees.

5. Does this change how it’s used/ marketed/ what the ambitions are for it, etc?

An EV focussed salary sacrifice benefits scheme can have a huge impact on lowering a business’s overall emissions. Tusker has found that companies can market the schemes on the both the strength of the environmental credentials as well as the economic benefits to employees.

Determine how you integrate it into existing operations 

6. What are the strengths and weaknesses of integrating it into your existing portal?

Tusker’s implementation process allows us to either integrate with an existing portal, or to standalone, the choice is entirely down to the customer and how they want to manage their benefits. An integrated benefits system can be beneficial when communicating the scheme to employees, as they are able to visit one site for all of their benefits. And, with our single sign on IT systems, it means the employee can login directly from the benefits platform, rather than having to have a separate login for the Tusker site.

7. What are the strengths and weaknesses of using a standalone portal where everything (support documents/ ordering/ ongoing management) is accessed?

Some of our customers like to keep all of their benefits separate, which means that employees can access the Tusker system via the portal, rather than an employee benefits platform. Once logged in, the site is identical whether using a third-party platform or coming directly to us. All of the documents are managed within the portal, so the employee can access it via their phone or computer, 24/7.

Build a communications plan 

8. What proves most effective when it comes to communicating the SS plan to employees and why is this the case? Are videos best or is it better to have webinars?

Tusker offer a bespoke marketing approach to the scheme for customers to fit within existing processes. Every business is different so we offer tailored communications to the customer to ensure employees are fully informed of the various elements of the scheme, including salary reductions, BIK and how to choose the right car for them.

Since the first lockdown, we have seen huge take up of webinars at the time of a scheme’s launch, which can allow large amounts of drivers to learn more about the schemes in a short space of time.  We also produce a vast array of videos which are available for hosting on intranet sites, or via links to our YouTube channel which help employers explain the scheme to employees. Equally, in-person launch events, often featuring a selection of available vehicles and product experts can be very popular, and often result in a high rate of employee engagement.

Choose the right salary sacrifice provider 

9. What attributes should you look for from your salary sacrifice provider?

The offer of a complete package for employees, not just the new car. The Tusker scheme offers insurance, breakdown cover, replacement tyres, servicing and maintenance as a complete subscription service, meaning peace of mind for employees and the employer.

It’s important to ensure that your salary sacrifice provide has a proven track record of delivering schemes across a wide range of businesses of all sizes. Implementing a salary sacrifice scheme often involves working with multiple internal stakeholders inside a company, alongside any other existing benefits suppliers, so robust processes and experience of these complex transactions are crucial to a smooth launch. Equally, it is important to ensure that the scheme is as risk-free as possible for the employer, as salary sacrifice schemes can be opened up to far more employees than a traditional company car scheme. Tusker offers a complete range of protections to endure that neither the business, nor employee is unduly penalised in the event of early termination for reasons including redundancy, sickness or maternity leave.

At a time of new car delivery constraints, selecting a provider with established relationships with manufactures and suppliers can pay huge dividends when it comes securing stock or negotiating delay periods on behalf of clients. Cars which are available soon are a huge benefit for those who cant wait for a car built to order, so Tusker secures a variety of these which are available in as little as 4-6 weeks.

One final point to consider drawn from our experience in implementing more than 1,500 schemes and putting more than 85,000 cars on the road in the past two decades, is to ensure that all stakeholders in a scheme’s launch are involved from the outset and clear processes are in place for managing cars through their lifecycle. By making sure that everyone who might need to be involved in a scheme is there from the very beginning, it can ensure the smooth running of the scheme from the outset.

*Tusker is in partnership with CPC Drive in providing our Salary Sacrifice Car Scheme.