Inchcape respond to demand for no-risk salary sacrifice scheme
Inchcape Fleet Solutions, one of the UK’s largest vehicle and leasing fleet management company’s, has launched ‘Justdrive’, a company car salary sacrifice scheme with built-in insurances that will safeguard employers against early unforeseen termination charges in the event of staff leaving the company and provide employees interested in taking up a company car salary sacrifice scheme access to an online portal that will provide a wide range of ‘driver touchpoint’ information including a cost calculator and a vehicle choice list.
Inchcape Fleet Solutions’ managing director Terry Bartlett said: “We have added a salary sacrifice scheme to our range of vehicle funding options due to massive interest from existing clients.
“Many of our clients already offer their employees a wide range of salary sacrifice options as part of their menu of flexible staff benefits and they want to add a company car scheme to that portfolio.”
‘Justdrive’ has been designed to provide a comprehensive range of insurances covering resignation and redundancy; and maternity, paternity and adoption as well as GAP insurance, protecting organisations against the risk of staff leaving their employment during the contract term.
Mr Bartlett said: “Our discussions with clients highlighted that while they were keen to offer a company car salary sacrifice scheme they wanted to be able to insure against taking on any additional costs such as early termination charges. We have therefore taken those concerns into account in launching ‘Justdrive’, which delivers a risk-free salary sacrifice solution to employers.
“Additionally, within the scheme employers can individually decide whether to share National Insurance contributions savings with employees and whether to include an administration fee, which enables them to build up a contingency fund in the event of unforeseen charges occurring.
“We believe that ‘Justdrive’ is a totally risk-free product for employers, while offering employees tremendous value for money and all the established benefits associated with taking delivery of a new car.”
Employees of Inchcape Fleet Solutions’ clients who decide to offer a company car scheme based on salary sacrifice will receive a personal invite to take up the option.
The ‘driver touchpoint’ portal includes: Information on a wide range of cars, vehicle comparisons and cost calculations . When making their vehicle choice employees will be able to calculate the net cost per month to them of their car and then order it online.
Inchcape Fleet Solutions, worked with financial experts at a leading professional services firm, and Inchcape Retail in realising and launching ‘Justdrive’.
Mr Bartlett said: “The firm we worked alongside with has huge expertise in delivering tax-efficient benefits to employees, while Inchcape Retail is one of the UK’s largest sellers of vehicles and has vast knowledge on the information private buyers need when selecting cars. Added to our fleet experience, that has enabled Inchcape Fleet Solutions to launch a market-leading salary sacrifice scheme.”
While the car salary sacrifice concept is in its relative infancy, financial experts believe that the development represent a sea-change in the fleet industry that is set to become a huge part of organisations’ remuneration strategies in the future.
Demand for company car salary sacrifice schemes has been triggered by the emergence of an increasingly large range of low emission vehicles from manufacturers.
Coupled with the Government’s motoring tax strategy to encourage the uptake of low emission models with ‘low’ corporate and benefit-in-kind tax rates on such models and related corporate National Insurance savings, there is a widespread belief that salary sacrifice will establish itself in the marketplace.
Mr Bartlett said: “Salary sacrifice works best when substituting salary for a taxable benefit at a much lower rate.
“With personal rates of tax high and set to increase and benefit-in-kind tax rates favouring low emission company cars we could see more cars being offered as perks just as we saw in the 1980s. In the future, salary sacrifice will play a major part in remuneration strategy in relation to cars.”
There are three major areas in which financial savings can be made:
· Employees – can make tax savings by sacrificing salary in return for a benefit-in-kind. In the case of a company car this would see a basic rate taxpayer giving up salary taxed at 31% (income tax and National Insurance contributions) and a higher rate taxpayer giving up salary taxed at 41% and opting for a car with emissions, for example, below 120 g/km and paying benefit-in-kind tax at these income tax rates on 10% of the P11d value (13% for a diesel car).
· Employers – April 2009 changes in corporation tax mean significant financial savings can typically be made on operating cars emitting 160 g/km or less – additionally 100% first-year capital allowances are available on cars emitting 110 g/km or less. National insurance savings can also be made as a consequence of paying a lower salary.
· Environment – there is a direct link between CO2 emissions and fuel consumption so running low-emission cars means lower fuel bills for employers and employees alike.
In addition, with many companies focused on ensuring they operate at-work driving policies and procedures within health and safety legislation and best practice duty of care advice, operating a company car salary sacrifice scheme eliminates ‘grey fleet’ concerns if staff have historically driven their own cars on business.
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