UK’s salary sacrifice fleet may have reached 150,000

22 February 2012

A week doesn’t seem to go past without yet another salary sacrifice deal being struck by one of the leasing industry’s biggest providers.

Each announcement results in thousands of employees, who would not normally qualify for a company car, facing a tempting choice – a car at a lower than expected cost, with the savings on income tax and National Insurance Contributions (NIC) outweighing the benefit-in-kind (BIK) payments.

However, thousands of employees being offered a car by sacrificing a proportion of their salary does not automatically translate into thousands of cars being ordered.

Take-up rates suggest that providers typically expect somewhere between 2.5% to 4% of all eligible employees will sign up in the first couple of years.

But just how popular are company car salary sacrifice schemes? Leading tax experts at Deloitte have estimated there could be as many as 150,000 cars being provided through salary sacrifice – that would equate to 11.5% of all company cars on UK roads.

David Raistrick, head of UK Automotive at Deloitte, told Fleet News the figure was based on FN50 contract hire companies and the overall volume of fleets they are running. He said: “We can then extrapolate based on the number of them offering salary sacrifice schemes and our own knowledge of the sector, based on the clients in the FN50 where we are involved.

“It is therefore a calculated estimate based on our own industry knowledge rather than any hard and fast data.”

However, the combined estimated salary sacrifice fleet for three of the industry’s biggest providers – Tusker, Zenith and Leasedrive – equates to only around 10,000 units.

Raistrick said: “It does appear to be a very fast-growing area, however, and I would predict the overall volumes of salary sacrifice vehicles will only go up.”

It’s a prediction that would be hard to argue against considering the series of announcements seen in the marketplace in recent weeks.

Zenith successfully launched what it describes as one of the largest private sector salary sacrifice car schemes in the UK for Santander.

Within a month of the scheme’s launch, more than 160 vehicles had been ordered. Zenith reports that ongoing take-up continues to exceeded expectations.

City Health Care Partnership Community Interest Company (CHCP CIC), which provides community health care in Hull and the East Riding, has appointed Tusker to provide a salary sacrifice car scheme.