01/05/2012

By Lesley Slater, Brand Director, LeasePlan

With many businesses across the UK facing up to the realities of prolonged cost cutting measures, the prospect of driving a new car has become a distant dream for many people. However, this slowdown in corporate spending need not mean the end of the company car as an employee perk.

Although the Chancellor’s latest Budget announcements have increased taxation on company cars, it is still possible to make the most of the tax breaks available and run a tax-optimised fleet.

Salary sacrifice schemes remain a tax-efficient, low-cost way for organisations to reach beyond the boundaries of traditional company car provision, into a broader employee benefit scheme, which can be made available across the board. As well as the vehicle itself, a salary sacrifice scheme can bring additional environmental, safety, and staff-retention advantages to any organisation.

On top of squeezed budgets, employers are also facing increasing pressure to reduce the risks associated with individuals driving their own vehicles. A new, professionally-maintained company car offers a way of moving away from this ‘grey fleet’ concern and can help organisations exceed their Duty of Care requirements.

A leased fleet can also bring positive environmental credentials. Leased vehicles tend to be newer and more fuel efficient than older vehicles. Employers also have the opportunity to specify the types of car available to their employees to encourage the use of lower carbon vehicles. This not only means greater tax efficiency, it can also reap a significant reduction in the carbon footprint associated with a company’s business mileage.

Usually, the key to creating a successful salary sacrifice scheme lies in generating sufficient interest among employees. Consequently, internal communication often proves to be one of the major challenges in encouraging organisational take-up. Launch activities are important to attract interest in the scheme, but it is equally necessary to maintain awareness once the scheme is up and running. Communications which signpost the ongoing benefits and savings afforded should continue months, if not years, after the scheme is started.

Salary sacrifice is typically more successful — and more cost-efficient — for both employer and employee where there are high levels of staff participation in a scheme.

By demonstrating the tax savings and highlighting that the scheme offers employees the opportunity to procure a new vehicle at a reduced cost, organisations can display the immediate benefit to an employee.

Overall, employees benefit from fully-budgeted, fully-managed motoring. Road Fund Licence, servicing, maintenance, tyres, insurance etc. are all included in the price of a scheme. At the same time, employers are able to offer a desirable employee benefit without a substantial increase in the overall cost of their remuneration package.


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