In today’s competitive job market, offering attractive employee benefits is crucial for retaining top talent and enhancing job satisfaction, and a popular benefit is a company car. Businesses are increasingly adopting blended car benefit solutions, which combine various schemes to cater to diverse employee needs and preferences.
In this blog post, we’ll explore three key components of blended car benefit solutions: Employee Car Ownership Schemes (ECOS), salary sacrifice, and car allowance. We’ll take a look at their advantages, how they work, and why they might be the perfect fit for your business.
Find out why company cars have remained a popular employee benefit in our blog: Is a Company Car Still Considered a Good Benefit?
Employee Car Ownership Schemes
Employee Car Ownership Schemes, commonly known as ECOS, offer a unique approach to providing car benefits. Unlike traditional company cars, ECOS vehicles are sold to your employees to transfer ownership, meaning Benefit-in-Kind (BiK) tax isn’t payable and offers greater flexibility and control.
Features of ECOS
Tax Efficiency: One of the primary benefits of ECOS is no company car tax. By transferring ownership to employees, ECOS eliminates this tax burden, resulting in significant savings for both you as the employer and your employees.
Flexibility: Employees have the freedom to choose from a wide range of vehicles, including petrol, diesel, hybrid, and electric cars. This flexibility allows them to select a car that best suits their personal and professional needs.
Simplified Fleet Solution Management: By outsourcing administrative tasks like maintenance, insurance, and compliance to third-party providers, you can simplify the management of your fleet solutions.
Employee Satisfaction: Offering ECOS can enhance employee satisfaction and retention by providing a valuable benefit that aligns with their preferences and lifestyle.
How ECOS works
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, if the employee chooses not to make their final payment to retain the car, they can simply return the car and order a new one. This hassle-free process ensures that your employees enjoy the benefits of car ownership without the administrative burden and unexpected running costs.
To find out more about ECOS, visit Our Solutions page: Employee Car Ownership Schemes.
Salary sacrifice
Salary sacrifice schemes are another popular option for providing car benefits. These schemes allow employees to lease a car by agreeing to reduce their gross salary. This arrangement offers several financial advantages and is particularly attractive for Electric Vehicles (EVs) now, because they carry a BiK rate of just 3%.
For more information on how BiK works read our guide: A Complete Guide to Benefit-in-Kind (BiK).
Features of salary sacrifice
National Insurance Savings: Your Class 1 National Insurance Contributions (NICs) are reduced as your employee’s gross salary is reduced by the amount of the car payment.
Attractive Employee Benefit: Offering a salary sacrifice scheme can enhance the overall benefits package, making your business more attractive to potential and current employees.
Environmental Goals: Encouraging the use of EVs through salary sacrifice schemes can help you meet sustainability targets and reduce your carbon footprint.
Simplified Fleet Solution Management: You can streamline fleet solution management by outsourcing the administrative tasks associated with car leasing, such as maintenance and insurance to third-party providers.
How salary sacrifice works
Employees select a vehicle from the options provided by you and agree to reduce their gross salary by a fixed amount. This amount covers the lease payments and associated costs. Insurance, maintenance, and road tax can all be included to ensure a smooth and hassle-free experience for everyone. At the end of the lease term, employees can choose a new vehicle and get a hassle-free renewal.
To find out more about salary sacrifice, visit our solutions page: Salary Sacrifice Cars.
Car allowance
Car allowance schemes offer employees the flexibility to use a cash payment to purchase or lease a car of their choice. This option provides several benefits and allows employees to have some control over their vehicle selection – but you can also set criteria such as a maximum permitted age and mileage, or the body style of the car required for it to be suitable as a company car.
Features of car allowance
Cost Control: You can manage and predict costs by providing a fixed car allowance instead of maintaining a fleet of company cars, which can have variable expenses.
Administrative Ease: Car allowances reduce the administrative burden associated with managing company cars, such as maintenance, insurance, and compliance with tax regulations.
Employee Satisfaction: Offering a car allowance gives your employees the flexibility to choose their own vehicle, which can lead to higher job satisfaction and retention.
Flexibility: You can adjust the car allowance amount based on job roles, seniority, or other criteria, to provide a tailored approach to employee benefits.
How car allowance works
Employees receive a cash payment, which they can use to purchase or lease a car. This payment is typically equivalent to the cost of a company car lease. Employees are responsible for all aspects of car ownership, including maintenance, insurance, and taxes.
We can help to manage the costs associated with providing allowances to your employees when you choose to implement an ECOS or salary sacrifice arrangement with us.
Why Blended Car Benefit Solutions?
Blended car benefit solutions combine the advantages of ECOS, salary sacrifice, and car allowance to create a comprehensive package that caters to diverse employee needs. By offering multiple options, employers can attract and retain top talent, enhance job satisfaction, and support employees’ personal and professional goals.
Find out more information on how blended car benefit solutions can improve employee job satisfaction and financial benefits in our blog: Drive Recruitment and Retention: The Power of a Car Benefit.
Key Benefits of Blended Solutions:
- Customisation: You can tailor the car benefit package to suit the unique needs of the workforce, ensuring maximum satisfaction and engagement.
- Cost Savings: Combining different schemes can lead to significant savings for both you and your employee, making car benefits more affordable and sustainable.
- Flexibility: You have the freedom to choose which cars are available to your employees that allows them to pick the option that best fits their lifestyle and preferences, enhancing their overall experience.
- Environmental Impact: Encouraging the use of EVs through salary sacrifice schemes supports sustainability goals and reduces your carbon footprint.
Fleet solutions from CBS
Blended car benefit solutions offer a versatile and attractive way to provide car benefits to employees. By combining ECOS, salary sacrifice, and cash allowance, you can create a comprehensive package that meets the diverse needs of the workforce.
This approach not only enhances employee satisfaction and retention but also supports financial savings and sustainability. If you’re considering implementing car benefits for your business, exploring blended solutions could be the key to driving success and achieving your goals.
If you’re looking for a fleet partner that can help you to effectively manage all of your employee benefits, get in touch with us today.
We can help to manage the costs associated with providing allowances to your employees when you choose to implement an ECOS or salary sacrifice arrangement with us.
FAQs
How can I reduce tax on company cars?
If you want to run petrol or diesel vehicles then implementing an ECOS is an effective way to reduce company car tax. Equally, if you want to go electric, then the current BiK rates for cars with low CO2 emissions is another way to reduce tax costs.
How often can I add cars to my car benefit package?
You can add cars to your blended car benefit package at any time.
Can CBS provide guidance on how to make the most out of company car budgets?
At CBS, we provide consultation and analysis to help customers find the best way to manage costs. Call us to discuss how we can provide you with a bespoke car benefit solution that fits your budget and business needs.