Print VersionSalary Sacrifice Car Schemes
A salary sacrifice car scheme from Masterlease provides your employees with a valuable flexible benefit and helps you meet a large number of your duty of care responsibilities.
The concept of salary sacrifice is not new; it has been used as a method of acquiring home computers, bicycles and childcare vouchers in a cost-effective manner. Masterlease has set up and run a number of schemes for our customers for several years and we have vast experience in managing these tax-efficient schemes.
More and more businesses are starting to consider salary sacrifice car schemes as a potential method to:
• Offer tax savings for both employee and employer
• Offer one of the most valued staff benefits – a company car
• Reduce risks linked to grey fleet business mileage
• Potentially reduce corporate CO2 emissions due to lower CO2 emitting vehicles undertaking any business mileage.
A salary sacrifice car scheme is a tax-efficient way of offering the benefits of a company car to those employees that may not normally be entitled to such a benefit. Schemes are being provided to the whole or a large part of the workforce, often sitting alongside traditional vehicle acquisition methods or structured company car schemes for essential business users.
Contract hire is the funding method, which is used to finance this type of scheme. Your business hires (leases) a vehicle for a specified period and mileage from Masterlease for the employee that has sacrificed their salary. Your business then makes regular payments to Masterlease to cover depreciation, breakdown cover, maintenance, vehicle excise duty, administration and much more. At the end of the agreed contract period the vehicle is returned to Masterlease. Your business handles payment collections from employees via salary deduction.
Benefit In Kind (BIK) liability is incurred by the employee as HM Revenue & Customs view the vehicle as a company car.
Masterlease recommends that tax office approval is obtained for your scheme and this can be facilitated by tax advisors, which we will introduce.
