Tuesday 24th May 2011 - Published by Kelly Jackson - Communications Executive
DRIVING UP COST SAVINGS
Savvy firms are going greener, keeping their workers happy and driving down company costs.
Salary sacrifice schemes for company cars are helping businesses to make costs savings, while also encouraging company’s to cut CO2 emissions.
Salary sacrifice for cars is similar to schemes such as childcare vouchers and cycle to work, in that deductions (in this case the lease cost of a vehicle), are made from gross salary – offering advantages to both workers and employers.
Essentially, the car is treated as a taxable benefit, so the lower its CO2 rating, the greater the saving. The scheme also creates significant savings in corporation tax and National Insurance.
Andrew Leech, Managing Director of Derby-based Fleet Evolution, believes that although the benefits of this form of salary sacrifice have been publicised, the true benefits are not clearly understood.
“The winners are drivers, the company and, notably, the environment,” said
Mr Leech.
“For instance, if a driver were to take a typical mid-range car, such as a VW Passat, the company would save more than £1,000 a year in tax and NI, and the employee would make an even greater saving (subject to mileage),” explains Mr Leech.
With the cars taxed, based on CO2 emissions, there are huge potential benefits for the environment.
“On average, we are supplying vehicles which are emitting a third less CO2 than the vehicles which they are replacing. In fact, 87 per cent of the firm’s orders are for vehicles that emit less than 120 grammes of CO2/Km.” Mr Leech said.
Company bosses, who feared that putting these benefit schemes in place would cause real headaches, are discovering switching to salary sacrifice can in fact be hassle-free.
“We find that many companies feel that such an arrangement would be far too complex to set up and police. But the truth is, it’s simple, providing you get the process right, and your partner has the technology to support, and manage the scheme for you. Thanks to companies like ours, businesses are untangling the bureaucracy of salary sacrifice,” said Mr Leech.
Fleet Evolution is so keen to put more firms on course for cost savings and a happier workforce, that it is offering to implement the scheme for free and giving free initial reviews to all qualifying companies during June.
