Extra factors to take into account on salary sacrifice

While salary sacrifice is a good idea to get low CO2 emission cars to employees at low cost (Fleet News, July 16), it is important to bear in mind that the acid test is whether the financial structure of the arrangement can be attractive when compared to what the individual employee could do with a third party provider on a individual basis.

It is essential employers take account of their costs in structuring the deal, which includes not only set-up costs but the issue over early termination and maternity.

Remember, these cars are leased to the corporate, who then is providing to the employee.

If the employee leaves, the employer is on the hook to meet costs during the remainder of the hire period.

If an employee goes on maternity leave then that employee is required to be provided with the same benefit package (which includes the car) so the employer will need to stand the costs.

I see this arrangement to be significantly different to ECO schemes and it is likely the situation is similar to affinity schemes offered some years ago.

The reason why these are no longer heavily marketed is that the employer spent considerable time and cost in setting up but take-up was very low.

In view of this, the leasing industry ceased to support. I hope this does not happen with salary sacrifice.

Employers need to bear in mind benefit-in-kind rule changes like the adjustment in CO2 emissions with the 120g/km figure being lowered. 

This could impact at mid-point in a hire arrangement and employees will then be out of pocket.

Alastair Kendrick, director, employment tax services, Mazars LLP

 

Transparent CO2 testing system

Regarding Stephen Briers’ editor’s comment (July 2) on CO2 emissions testing, there are a few points which I feel I should clarify.

There is a correlation between fuel consumption and CO2 emissions, so the suggestion that emissions are self-certified whereas consumption is regulated, is incorrect.

The testing system provides a transparent and like-for-like comparison of all vehicles.

Official figures are based on simulated tests; these are mandated by law. They represent an accurate car-by-car comparison based on identical test criteria.

Real-world fuel consumption (and hence CO2 emissions) is affected by a host of factors, not least driving style. Factors such as poor maintenance, weight and incorrectly inflated tyres also play their part.

The test for Type Approval is carried out on a rolling road over a prescribed cycle designed specifically to attempt to replicate ‘real world driving’.

Every test is witnessed by the type approval authority (VCA in UK) and test laboratories are regularly checked with very stringent calibrations of equipment.

Nikki Rooke, Society of Motor Manufacturers and Traders

From the forum

Should we start trying to compete on a purely price-led playing field or does the customer appreciate service levels too?

We seem to be swimming against the tide in that we believe in ‘value’ as opposed to the absolute lowest rate and have probably hurt ourselves by sticking to our principles.

Chizzy

Customers prefer you being upfront with the services and cost you offer. You may lose a few gullible customers, but when the penny drops who will they be giving their repeat business to?

Peter Cary