Guy Roberts, SG Fleet UK, looks at the balance of fleet and car salary sacrifice – and what employers should invest in
As anyone familiar with the rise in popularity of voluntary benefits will know, salary sacrifice has been the runaway story of recent years. It’s easy to understand why. It’s the ultimate in making reward personal, because it hands control to employees to choose the benefits they prefer – and by combining this with salary sacrifice, they are more cost effective, with them (and their employer) potentially paying less tax and NI. It’s win-win all round.
Cars have been part of this success, with salary sacrifice beginning to become one of the most popular ways for people to buy a new car. But we think there’s confusion in the market that is hindering its further growth. sgfleet apart, we feel the market is still very much a ‘fleet’-oriented one, with products developed by fleet providers with a ‘fleet mindset’ about them. Contracts are between the fleet provider and the employer – which can often mean this reward isn’t very personal at all.
Not surprisingly this fact is causing some reluctance amongst employers to get involved. Companies quite rightly don’t want to end up with lots of fleet cars on their books. They also are concerned about what happens if an employee leaves, as they do not want be left with a full car park or face any early termination costs. This quirk in the way cars are offered is having a dampening effect just when demand could be rising.
A CLEAR SOLUTION
That’s why we feel we’re able to bring some clarity to a confused market. We believe salary sacrifice for cars shouldn’t be a fleet product. Fleet cars are aimed at people who need cars primarily to do their job – but this doesn’t help regular staff who could also benefit from a car in their package. Currently fleet providers are trying to take a fleet product and marry it to salary sacrifice – but it’s a partnership that doesn’t always work. sgfleet are different because our solution is entirely personal. Our contract also involves the employee. It may sound like a small difference, but it has huge advantages for both employees and employers.
Our solution, Novalease, is based on novated leasing, which means that if an employee leaves, they simply take the lease with them and begin a new salary sacrifice arrangement with their new employer. Our unique solution has been developed from the ground up, with the needs of both the employer and their employees specifically in mind. The key benefit for the employer is that they can provide what will be a very attractive benefit with minimal administration and they will not have any cars on their books.
SAVINGS AND BENEFITS
For salary sacrifice to grow, we feel novated leasing is the model which works in both the employer’s and employee’s best interests. Currently, there are lots of employers out there that like the idea of car salary sacrifice, but they have a number of concerns particularly around employees leaving and a high level of administration. Novated Leasing does not create these issues.
In addition to the tax savings, there are other benefits to employees. Our leased cars come with full maintenance – including servicing, and most important, they include high-cost items like a new set of tyres. All-told we estimate an employee makes an average 30-40% saving on the cost of getting a new car by other means.
Owning a new car has many other advantages. It can provide drivers around £30-£40 worth of fuel savings per month over older vehicles. It also gives employers the chance to promote a green agenda too. By promoting more fuel efficient cars to their employees, employers will be having a positive impact on the carbon footprint of the business. To assist with this, we are able to track the emissions reductions for a scheme.
But, ultimately, we feel it’s a true personal touch of providing a car through salary sacrifice that employees really appreciate. What’s more personal than being able to allow staff to get their choice of a new car on their terms –not just one from a very short list and a standard term, but one that suits their own very personal tastes, affordability and green aspirations? We offer choice from low-emission cars, right up to family, executive and even sports cars. Do you want to make your reward personal? We feel cars through salary sacrifice gets pretty close to the best way of doing this. But we also feel it’s our unique model that enables this to happen best. Happy motoring!