Salary sacrifice: "easiest conversation with employers in 30 years" (video)

By Andrew Ryan

17 October 2023

Advising employers to offer a car salary sacrifice scheme to its staff is “one of the easiest conversations I’ve had in 30 years”, says Jez Howson, employment tax director at Azets.

The benefits allows employees to access new cars at below usual personal leasing rates by sacrificing salary before tax, resulting in income tax and national insurance savings. Employers also make NIC savings.

It is particularly effective for employees who choose battery electric cars, as the benefit is subject to benefit-in-kind tax, which is at 2% for zero emission cars.

Salary sacrifice leases also usually include insurance, servicing and maintenance.

“I try to sell lots of things around tax, and this is one of the easiest conversations I've had in 30 years of advising employers,” said Howson, who was speaking at The Big Salary Sacrifice Debate at Fleet & Mobility Live.

“You can explain it to employees as a genuine opportunity to move away from petrol and diesel cars.

“I’m not saying its across the board more affordable, but I think it opens the door to getting that car probably sooner than the average employee would under normal circumstances, say via a sort of personal leasing.

“It's probably one of those things that is better when a third party talks to the employees, as they can often explain the situation better.

“This certainly helps in the pension field when you're talking about pension salary sacrifice advice, because you might think ‘what’s my employer up to here, give up salary, more pension?’.”

The panel also included James Ferrol, fleet manager at Dunelm, and Amanda Bullough, EMEA benefits lead at Siemens, which introduced a salary sacrifice scheme inNovember last year after requests from employees.

This has seen a “huge amount of interest”, said Bullough. “Around 23% of our population have engaged with the benefit; so that’s unique log-ins and creating accounts and running quotes..

“We’ve had around 150 vehicles delivers, some of which were within two months of the plan going live.”

During the session, which can be watched in full below, the panel also spoke about the challenges in implementing and running a salary sacrifice scheme, obstacles to adoption, and best practice advice for fleets.