Car benefit schemes – here to stay
There has been much said about the changes to salary sacrifice schemes, with some confusion as to what the changes actually mean for drivers. This confusion has led to several commentators once again asking about the future of salary sacrifice car schemes. Comment from Paul Gilshan, CMO of Tusker.
Salary sacrifice encompasses a range of benefits, but through the recent government changes car schemes, like childcare vouchers and cycle to work schemes, they were treated more favourably than other salary sacrifice products. Salary sacrifice cars already had a fair tax system through Benefit in Kind, which has been in place for over a decade and works well, supporting government environmental and road safety policies. And while the recent changes have meant that the way cars are taxed has altered a little, it hasn’t affected their availability, nor their attractiveness. The actual financial impact has been minimal.
The new rules came into force on 6th April 2017 and Tusker has been analysing the impact on drivers. The company has found that salary sacrifice for cars have been significantly less affected than other salary sacrifice products. Originally it was thought that approximately half of all salary sacrifice drivers would not be affected at all, as well as Ultra-Low Emission Vehicle drivers (those who choose cars with emissions of 75g/Km CO2 or less). The reality, following the publication of the Finance Bill in March this year, is that even fewer cars are impacted.
When the tax changes were announced at the Autumn Statement in 2016, Tusker found that they had very little effect on the popularity of car schemes. Tusker continued to see an increase in orders, with the company’s best ever start to a year in 2017. The company puts the continued interest in salary sacrifice for cars down to the wider advantages in implementing a scheme. For most salary sacrifice drivers there are still significant savings to be made through a scheme. These savings can be made through NI, and where applicable, pension savings. In addition, the buying power that Tusker has as market leader, means that drivers also benefit from manufacturer discounts and very competitive corporate finance rates.
However, Tusker’s research found that only 3 percent join because of tax savings, with 77 percent joining the scheme because of the all-inclusive, hassle free package, which offers great value against other methods of driving a brand new car. All of these benefits are still there and form a big part of why Tusker’s Car Benefit Scheme remains so popular. It is not just drivers who benefit from such schemes. They have proved to be hugely popular amongst employers wishing to increase staff motivation and engagement. Because a car is such a valuable benefit, employers are using them to recruit and retain the best people. What’s more, there is no cost to employers to set a scheme up.
Paul Gilshan, CMO of Tusker, comments: “With all the talk around salary sacrifice schemes it is easy to understand why some people are confused about the changes which the Government has announced. However, all of the benefits, both to drivers and to their employers, remain, and have now been endorsed by the Government, providing clarity and certainty for their future.”