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No cost engagement

A salary sacrifice car scheme enables employees to drive a low cost, brand new car at no cost to your company

A salary sacrifice car scheme enables employees to drive a low cost, brand new car at no cost to your company. It is a great way to increase loyalty,motivation and productivity. And as the economy recovers there is more competition to attract and retain quality employees, which is making the provision of innovative benefits even more important.

How does it work?

Employees exchange a fixed reduction to their gross salary and get to drive a brand new car with an all-inclusive package. As the employee’s salary is reduced they pay less income tax and National Insurance. They also get access to corporate discounts which can enhance the savings achieved. The cars are subject to Benefit in Kind tax (BiK) as they are classed as a company car, however for low emission cars the savings that are made will more than offset the tax payable.

Salary sacrifice car schemes can be offered to a wide employee base, however in order to be eligible, employees must earn enough salary to ensure that the sacrifice does not take them below the national minimum wage.

Benefits to your organisation

  • A high value benefit at no cost to your company
  • Attracts, retains and motivates employees
  • Can replace a company car scheme or optimise cash allowance benefits
  • Can open an additional income stream
  • Improves your duty of care compliance
  • Boosts your CSR objectives
  • The scheme can be tailored to your company’s specific needs

Benefits to your employees

  • Fixed monthly payments
  • No deposit and no hidden costs
  • An all-inclusive package
  • Significant cost savings compared to retail alternatives
  • A wide range of choice
  • Hassle-free motoring
  • A dedicated team to help with any queries

Decision making factors

Now that some of our salary sacrifice car schemes are going through their second or third cycle we have built up a wealth of data and analysis. When employees are asked why they chose salary sacrifice, the most common reasons cited are the cost savings, the fixed monthly costs with no upfront payment and the ease and convenience. We also know that most employees (62%) opt for a car as part of a usual replacement, with the remainder being due to a lifestyle change such as a new child or joining a new company. When it comes down to car choice monthly price, fuel cost and then brand are the biggest considerations.

Communication is crucial

Employers need to work closely with their salary sacrifice car scheme partner and ensure that communication channels are as open as possible. Marketing plans need to evolve and continue throughout the life of the scheme to increase take-up and engagement.

Some employers are concerned about over communicating schemes however a survey we carried out in 2014 showed that 85% of employees wanted more communication about them.

Digital communications are usually combined with other methods such as poster campaigns and roadshows at offices. You may be able to utilise employee newsletters and the intranet to ensure that employees are constantly reminded of the scheme and the latest offers available.

A provider should work with you to create a tailored marketing and communications plan. An employee survey can provide useful information to help market the scheme on launch in terms of types of cars to promote. Following scheme launch, data can be analysed on quoting and ordering patterns to provide a full and accurate picture of vehicle trends and price points.

How is a scheme implemented?

A scheme typically takes around 8-12 weeks to implement. Your provider should implement the scheme on your behalf and make the process as easy and simple as possible.

Lifestyle events

As the lease involved in a salary sacrifice car scheme is between your leasing provider and the employer, the company is potentially liable for any early termination. There are also cost implications that may arise from events such as maternity or paternity leave and long-term sickness. However these can be fully offset through methods such as insurance and contingency funds. Appropriate solutions can be put in place to mitigate all risks.

What’s next for salary sacrifice cars?

As interest in tax efficient benefits increases and an understanding of the need to select the most valuable rewards grows, salary sacrifice car scheme adoption will continue to increase.

There is a growing understanding of the need to analyse the impact of benefits. A data driven approach is helping companies to understand their value and enable the reward package to be continually evolved. This is creating more demand for innovative and exciting benefits such as salary sacrifice, which can add real value to both organisations and employees.

To find out more contact Zenith today on:


Call 0844 243 4371


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