SalSac – what is it?

Salary sacrifice is an attractive, yet tried and tested method of delivering a tax efficient benefit to employees, at little or no cost to employers.

It enables your employees to drive a brand new, cost-effective electric car for a great deal less than if they had leased it privately.

You lease a tax efficient zero emission electric car, which you then provide to your employee as a company car in return for the salary sacrifice. As the cost of the car is deducted from your employee's gross salary, payroll deductions are based on their lower, revised salary, thus reducing the income tax and National Insurance Contributions ("NIC") they pay each month.

As sizeable VAT savings may also be available, your employee can access green, zero emission cars at a fraction of their normal cost.

And you also benefit from monthly NIC savings, which could be substantial.

If you who operate a grey fleet, because increasing company car tax on traditional petrol and diesel cars has encouraged drivers to take the cash alternative, a salary sacrifice scheme is the ideal way to reduce your Duty of Care risk and your carbon footprint.

Why use us?

We work closely with employers, leveraging our experience with scheme modelling, structure, and policy, combined with our multi-bid funding solution, to deliver cost-effective salary sacrifice solutions that are attractive and easy to manage for both employers and employees.

We also provide comprehensive employee and employer salary sacrifice quotations and generate an array of scheme documents to help you set up and run your scheme, including the salary sacrifice agreement, FAQs and payroll guide.

SalSac & Electric Cars.

Electric cars are exempt from the Optional Remuneration Arrangements (“OpRA”) legislation, which restricts the savings available via salary sacrifice. Therefore, salary sacrifice is particularly effective for employees who choose a fully electric, zero emission car because they attract very low rates of company car tax.

You save much more NIC on the salary sacrificed compared to the minimal amount of you pay on your employee's new company car.

Sample quotes for two popular electric cars are presented at the end of this factsheet.

What are the risks?

Despite the many benefits, there may be some costs, for example when employees leave your employment.

However, if it's not possible to reallocate a leaver's car to another employee our modelling confirms that most employers should be able to offset these costs, and parental leave costs, using some of their NIC savings.

And, if necessary, a small premium could be included within each employee’s monthly salary sacrifice.

Is SalSac right for you?

Salary sacrifice is not intended to replace your company car scheme, but to enhance the benefits offered to all staff, including employees who’ve opted for a cash allowance, and is therefore an attractive solution that would complement any existing company car scheme.