New SalSac Launched
Did you know that we are now offering a brand-new salary sacrifice scheme?
Simply put, the Salary Sacrifice programme, which is also known as Salary Exchange, is a scheme whereby an employee forgoes a proportion of their monthly salary in exchange for a brand-new electric vehicle.
It is already proving hugely popular since its launch at the beginning of 2023 as business owners and employees in Northamptonshire can make substantial savings on company cars with the scheme.
The sum sacrificed is taken out of the worker’s gross pay, before any PAYE tax and National Insurance is applied, therefore an employee’s taxable salary is reduced which means that they pay less tax.
The employer also makes savings too- they pay less national insurance contributions, and are usually able to claim back VAT on the monthly payments.
Individuals may be aware of the Cycle to Work scheme, which works in the same way.
The payments are calculated and taken automatically each month and Silverstone Leasing are able to tap into large discounts offered by lenders to base the payments on. Silverstone Leasing works in conjunction with the finance funder to offer the Salary Sacrifice scheme and with the business to correctly adjust the monthly payment contributions. This is all taken care of behind the scenes and very easily set up in one tidy package!
At a time when cost of living is sky high, this is a fantastic option for drivers. When comparing the Salary Sacrifice scheme against traditional forms of financing a car monthly such as a Personal Contract Purchase or Hire Purchase, where you pay out of your take-home pay, (after tax), an individual stands to make significant savings - perhaps several hundred per month - compared to those types of finance.
As well as the savings to be made, there is the choice of a new electric car, maintained and delivered to you for a fixed monthly cost.
The scheme is only available through an employer - an individual cannot apply directly. However there are no minimum requirements for a business’s size or number of employees and if you are interested, you should absolutely approach your employer who may want to use the Salary Sacrifice to incentivise staff whom aren’t in a traditional Company Car Scheme or offered a cash allowance.
Also, the scheme is only for electric vehicles, which are extremely inexpensive to run compared to petrol or diesel. In 2030 the sale of purely petrol and diesel cars will be banned in the UK so driving electric sooner will offer experience and preparation for the changeover.
The vehicles in the scheme are always brand new and the monthly payment also includes all the car’s servicing, tyre replacements, routine maintenance and repairs, MOT, road fund licence, insurance, and breakdown and recovery are included for the duration of the term.
As the employer is the one leasing the car on behalf of the employee, there is no credit check personally for employees, meaning that those with poorer credit may still take part and for an employee, as well as the huge monthly savings, there is no large upfront payment or deposit unlike other forms of car finance.
Unlike other forms of purchase, there is no risk to either the employer or employee with the depreciation of the car – you just hand the car back at the end. Furthermore, there is protection in place if the employee decides to leave the company part way though the contract.
As with any opportunity, there are some factors to be aware of. Because the car is classed as a benefit it attracts Company Car tax (Benefit In Kind), but this is currently fixed at two percent until 2025.
An employee’s overall net pay is reduced so they should be aware that any future borrowing may be affected-for example with mortgage providers, pension contributions may also be affected by a lower salary, and the scheme may not be suitable for those planning to take maternity leave.
As the selection of cars is purely electric, the driver should also consider if they are able to adequately charge the car at home, in a public charger or at work. The scheme may not work for everyone but if your employer offers it, or is considering it, it is well worth looking into.
Once an employer has spoken with Silverstone, the monthly savings can be calculated for employees and all the information provided. Tom Bailey, here at Silverstone Leasing, is leading he team on the salary sacrifice scheme. He can be reached on 01604 978480 at https://www.silverstoneleasing.com/ or emailed at email@example.com