Interest in offering car salary sacrifice schemes to staff is increasing, but there remain significant concerns about the viability of such a benefit in some organisations, according to a survey by fleet decision-makers’ organisation ACFO.

Its online survey, which attracted responses from members and non-members collectively operating more than 19,000 company cars and employing more than 100,000 people, revealed that more than a third of respondents (36%) offered a car salary sacrifice scheme.

That is significantly higher than a similar ACFO survey carried out 18 months ago, which suggested that a fifth of respondents (20%) already had a salary sacrifice scheme in place.

However, it does mean that despite the hype around the popularity of fashionable car salary sacrifice schemes, almost two thirds (64%) of fleet decision-makers say their employers currently do not offer such an option.

Nevertheless, indications from the survey suggest that car salary sacrifice schemes are set to grow in their popularity with almost half (48%) of  respondents not currently offering such an initiative saying their employer was currently evaluating the merits of introducing such a benefit to employees. Additionally, 52% said such a scheme had yet to be considered.

However, it was also clear from the survey that some fleet operators (23%) said their employer had no interest in introducing a car salary sacrifice scheme and ruled one out for a variety of reasons.

They included:

• Forthcoming changes to international accounting standards that will result in all leased assets - including salary sacrifice scheme cars - being reported on a company’s balance sheet with a corresponding liability being incurred for future rental payments

• Businesses being too small to believe they would benefit

• Concerns that offering a scheme could conflict with wanting to increase the take-up of company cars

• Job uncertainty in a challenging economic climate that could mean employers facing early termination costs in the event of an employee leaving, being on long-term sick leave or on maternity leave

• A perception that car salary sacrifice schemes were incompatible with company car schemes through which premium badge cars were available and not beneficial as a replacement for “grey fleet” vehicles.

Perhaps surprisingly, only 4% of respondents said introducing a car salary scheme had triggered a reduction in the number of employees driving their own cars on business trips.

As some salary sacrifice schemes are targeted at employees that do not qualify for a company car by virtue of their employment, there is a widely held belief that their introduction would reduce the size of an organisation’s “grey fleet” - employees who drive their own cars on business trips - and thus deliver a range of benefits.

Those benefits include reducing a company’s carbon footprint as cars operated via a salary sacrifice scheme typically have lower emissions than privately owned vehicles; and boosting an organisation’s focus on occupational road risk management as employer-sourced cars are regarded as easier to manage in terms of collating an audit of vehicle and driver documentation.

ACFO chairman Damian James said: “Salary sacrifice is one of many useful tools in the vehicle funding and employee benefits toolboxes and it is clear from ACFO’s survey that demand is growing.”

However, he added: “From the survey results it is also clear that some employers with several thousand employees and large fleets are using salary sacrifice as an alternative funding mechanism for company cars.”

Most vehicle leasing and fleet management service providers now offer some forms of car salary sacrifice scheme, which rely for their viability on the differential tax and National Insurance contribution treatments of ‘cash’ and ‘benefits’.
 

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