Guy Roberts discusses the implications of the chancellor’s Autumn Statement on car salary sacrifice arrangements
As it stands, little will change for car salary sacrifice schemes as a result of the measures announced in the Autumn Statement. Salary sacrifice still remains a very cost-effective method for employees to obtain a new car.
Alongside cycle-to-work schemes, pensions and childcare vouchers, cars were exempted from the changes to salary sacrifice benefits announced in the Autumn Statement. Specifically for cars, any arrangements in place by April 2017 will be protected until April 2021.
For orders after April 2017, there will still be tax and National Insurance savings for low emission cars (those with CO2 emissions of 75g/km and below), and cars with CO2 emissions up to around 130g/km can potentially still attract employee NI savings.
This does not mean that there are no savings to be made on other cars. Undoubtedly, some leasing companies and finance brokers will be promoting personal leasing schemes as an alternative to car salary sacrifice schemes. These schemes will allow employees to benefit from savings through corporate discounts and all-inclusive leases.
However, it is not just a choice for employers between a personal car leasing scheme or a car salary sacrifice scheme. Perhaps a better solution would be to have a scheme where the employee has the option to fund the car through salary sacrifice or pay the leasing company directly.
Novalease, sgfleet’s market leading offering, is an innovative solution for employees looking to buy a new car. Employees do have the choice of funding the car through salary sacrifice or directly from their bank account. The unique feature is that with both options, the lease for the car will be with the employee and not the employer. This concept has been a key differentiator for Novalease since its launch in 2012.
If an employee leaves a company, they will take the car and the lease with them, so there are no early termination costs. The employer has no need for contingency funding or early termination insurance, nor for the employee to pay this cost.
Employees will have access to any car in the UK market, with all leases benefiting from the buying power of sgfleet and the corporate discounts that it yields.
In addition, there is the convenience of the ‘Fuel and Go’ service, with running costs such as servicing, tyres, maintenance, roadside assistance and insurance included in the lease. All an employee has to do is put fuel in the car and go! The idea is to provide hassle-free motoring, coupled with significant savings on the cars that people really want to drive.
Cars are typically the second biggest purchase employees will make, therefore savings on cars, by definition, will far outweigh the savings on any other voluntary benefit.
Due to the level of the financial commitment and given the large choice of cars, it is important that employees receive guidance on the choices available to them.
By nature, we take a consultative approach, so in addition to online quoting tools and scheme information, we encourage individuals to call our Novalease consultants, who can help them understand the scheme and the finance options available to them. This will help them decide on the right car for their circumstances and, perhaps more importantly, their finances. We also have consultants who are able to visit an employer’s offices to provide staff presentations and individual consultations.
Novalease is an innovative, unique and flexible approach for employees looking to source a new car. It provides any employer with a no risk/no cost approach, with minimal administration, to offering a very attractive and worthwhile voluntary benefit to its employees.