Whatever your needs – petrol, diesel, hybrid, or Electric Vehicles (EVs), Car Benefit Solutions (CBS) has a scheme that fits.
In this guide, CBS explores two key components of a blended car benefit solution: Salary Sacrifice and Employee Car Ownership Schemes (ECOS). We’ll take a look at their advantages, how they work, and why together they’re the perfect fit for your business and employee needs.
What is a salary sacrifice scheme?
Salary sacrifice schemes are a popular way for businesses within the automotive industry to provide car benefits. These schemes allow employees to have a brand-new car by agreeing to reduce their gross salary. This arrangement offers several financial advantages and is particularly attractive for EVs, because they carry a Benefit-in-Kind (BiK) rate of just 4%.
Features of an automotive salary sacrifice car scheme
National Insurance Savings
Your Class 1 National Insurance Contributions (NICs) are reduced as your employee’s gross salary decreases by the amount of the car payment.
Residual Values (RVs) and Write-Downs
Offering our salary sacrifice scheme allows you to adjust RVs to mitigate risk and share write-down costs with your employees.
Business Savings
Enhance savings by controlling the level of benefit and deciding how the savings are distributed.
Short, Flexible Vehicle Cycles*
Increase your volume of registrations with our salary sacrifice, changing vehicles every 6-months.
Environmental Goals
Encouraging the use of EVs through salary sacrifice schemes can help you with your transition to electric in line with Zero Emissions Vehicle (ZEV) Mandate targets.
*In accordance with minimum holding periods and subject to a minimum 12-month arrangement.
How salary sacrifice car schemes works for automotive customers
Employee Car Ownership Schemes (ECOS) provide an alternative way to offer car benefits by transferring vehicle ownership to employees. As the employer, the BiK tax isn’t payable, offering greater flexibility and operational control for employers within the automotive industry.
Tax Efficiency
One of the primary benefits of ECOS is no company car tax. By transferring ownership to employees, ECOS removes the company car benefit, meaning no BiK tax liability. This can result in significant savings for both the employer and employees.
Gain Full Control
You choose how much your employees pay. If required, we’ll support you with any gross-up calculations for tax and National Insurance, ensuring compliance while keeping the process straightforward for both you and your employees.
Flexibility
You have the freedom to choose which cars can be added to your ECOS solution, and this can be a combination of petrol, diesel, plug-in hybrid, or self-charging hybrid vehicles.
Employee Satisfaction
Offering ECOS can enhance employee satisfaction and retention by providing a valuable benefit that aligns with their preferences and lifestyle.
How Employee Car Ownership Schemes work
Employees select a vehicle, and the car is sold to them at an agreed price. They pay a fixed monthly repayment, which is deducted from their net pay. At the end of the term, employees can settle any remaining balance and keep the car, or they can sell the car back and order a new one – leaving you with a prime used car for your forecourt. This hassle-free process ensures that your employees enjoy the benefits of car ownership without the administrative burden and unexpected running costs.
One solution, multiple schemes
As the UK’s Zero Emission Vehicle (ZEV) Mandate requires 33% of all new car sales to be zero-emission in 2026, having an employee car benefit scheme tailored specifically to automotive retailers for EVs could help you align with market and manufacturer expectations.
It allows you to share the costs of running the EV benefit with your employees, while enjoying the tax efficiencies of a salary sacrifice arrangement.
CBS’s automotive salary sacrifice solution offers short vehicle cycles, meaning cars can be changed more frequently to meet the needs of your business and mitigate Residual Value (RV) risk.
In comparison to typical four-year salary sacrifice arrangements, where you don’t get a new registration for four years, in our scheme, you could get eight vehicle cycles in the same time period for just one employee.
A salary sacrifice scheme can run alongside your existing car schemes to form one blended solution delivered by one provider, giving you an option for every fuel type and driver.
Why choose a blended car benefit solution?
Blended car benefit solutions combine the advantages of salary sacrifice and ECOS to create a comprehensive package that caters to the diverse business needs of businesses across the UK’s automotive industry. Here are some key benefits:
- Customisation: You can tailor the car benefit package to suit the unique needs of the business, ensuring maximum satisfaction and efficiency.
- Cost Savings: Combining different schemes can lead to significant savings for both you and your employees, making car benefits more affordable and sustainable.
- Flexibility: You have the freedom to choose which cars are available to your employees, so you can offer what works best for your business pipeline.
- Environmental Impact: Encouraging the use of EVs through salary sacrifice schemes supports the transition to electric vehicles and the ZEV Mandate targets.
If you’re ready to start looking at targets or your automotive business is ready for an employee benefits package suitable for all powertrains, turning your solution into a blended approach could help you reach your business objectives.
If you want to discuss your current car scheme, get in touch today.