Enabling portability of salary sacrifice car schemes creates a win-win situation for employer and employee writes Gordon Calder-Jones, Business Development Director at Maxxia.

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A new independent research report shows that there’s much confusion amongst HR professionals regarding salary sacrifice car schemes. While many companies understand the merits of them, others can be put off for various reasons although most HR people are unaware of what’s actually possible.

This is demonstrated by the fact that 82% of HR professionals claim to either fully, or at least partially, understand salary sacrifice car schemes. However there is a clear gap between expectation and desire. Just 29% of HR staff think it is possible for an ex-employee to keep their car when they leave mid-term – but 71% would like them to have this option, and only 30% would like the car returned. It is clear, from this gap, that most HR decision makers are unaware that a new paradigm fulfilling this need is available in salary sacrifice car schemes.

Salary sacrifice car schemes have been growing in popularity recently for a huge variety of reasons. They function as part of an attractive rewards package that can both draw in new employees and retain and motivate existing staff. They reduce the amount of NICs to be paid, providing a cost-effective solution for all parties. And they encourage the use of ‘greener’ low-emission vehicles, improving the company’s green credentials and corporate responsibility. However, the administration and cost involved in cases of early termination has always been the drawback that has prevented employers from adopting the schemes.

Maxxia’s Lifestyle Lease scheme has eliminated this problem. The lease is established with the individual employee rather than the employer, relieving the latter of any early termination liability. On top of this, it creates a fully portable agreement, allowing the employee to take the car with them if they leave the organisation.  They can then choose whether to continue enjoying the benefits of the scheme through their new employer, continue privately, or terminate the agreement. By using this innovative solution, employers can now experience a hassle and risk free salary sacrifice car scheme for the first time.

For employees, the benefits are clear. They take delivery of a brand new, fully maintained car at a lower cost than if they were to buy a car privately. This includes all servicing, MOT after three years, batteries, exhausts and tyres, accident management and roadside assistance, and annual road fund licence. Their income tax and National Insurance contributions (NICs) are reduced and although a Benefit-in-Kind (BIK) tax must be paid instead, this usually still results in an overall saving, depending on car choice. Because of this, lower-emission cars become more popular, helping both the employee and employer to reduce their carbon footprint.

Through a properly constructed scheme, costs are saved by the employer as well. The NICs they have to pay for the provision of the car are less than those they would have paid on the salary that has been sacrificed. Furthermore, by encouraging employees to transfer into regularly maintained, comprehensively insured and ‘green’ cars, employers reduce the risks associated with the ‘grey fleet’, and as such can better manage their duty of care obligations. This sends out a strong positive message when it comes to the organisation’s corporate responsibility.

While the mutual cost-saving benefits would be reason enough to consider Lifestyle Lease, it is the intangible benefits that really add value to the scheme. Employees who traditionally wouldn’t have been offered company cars can now become eligible, boosting current staff morale as well as making the company more attractive to potential employees. These consequences cannot be underestimated when considering whether to introduce a salary sacrifice car scheme. Recruitment and retention of staff is a vital part of any organisation and the ability to improve results in these areas through the Lifestyle Lease scheme is a huge advantage. There are also no set up or administrative costs and, because Maxxia offer full support during the process, implementation is simple and so requires very little effort.

Other salary sacrifice car schemes would struggle to offer all of these benefits with none of the risks attached. The primary barrier to employer adoption of these schemes is the responsibility of settlement in the event of early termination, which many businesses perceive as an unacceptable level of exposure. By removing this possibility, so as to keep the employer in a risk free environment without passing risk to the employee, Lifestyle Lease provides a game-changing solution to this sector. It is also completely compliant with the relevant and anticipated UK tax, regulatory and employment laws, and Maxxia is authorised and regulated by the FCA.

Emission cutting, cost saving, and employee winning: Lifestyle Lease offers it all. By removing any risk or hassle through the creation of a fully portable scheme, Maxxia has provided both employer and employee with a salary sacrifice car scheme that really makes sense for all involved.

You can download Maxxia’s independent research report on HR views on salary sacrifice car schemes at: www.maxxia.co.uk/salarysacrificecarschemes.pdf  

For more information on Lifestyle Lease, visit http://maxxia.co.uk/lifestyle-lease.