Whatever your needs – petrol, diesel, hybrid, or Electric Vehicles (EVs) we’ve got a scheme that fits. In this blog post, we’ll explore 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.
Salary sacrifice
Salary sacrifice schemes are a popular option for providing 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 3%.
Features of salary sacrifice
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 – giving you more control.
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 works
Employees select a vehicle from the choice list tailored by you and agree to reduce their gross salary by a fixed amount. This amount typically covers the lease payments and associated costs, although you retain full control over how much is collected via the salary sacrifice.
The car is leased by you and is treated as a company car, so your employees still pay BiK. Although gross salary is reduced, your employees save on income tax and NICs, making the scheme cost-effective when compared to paying for the same vehicle privately.
Employee Car Ownership Schemes
Employee Car Ownership Schemes, commonly known as ECOS, provide an alternative way to offer car benefits by transferring vehicle ownership to employees. Because they’re the owner, BiK tax isn’t payable – offering greater flexibility and operational control for employers.
Features of ECOS
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 you as the employer and your 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 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, employees can settle any remaining balance and keep the car, or they 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.
Our 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 4-year salary sacrifice arrangements, where you don’t get a new registration for four years, in our scheme that could be eight vehicle cycles in the same time period, for just one single 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, every driver and every need.
Why blended car benefit solutions?
Blended car benefit solutions combine the advantages of salary sacrifice and ECOS to create a comprehensive package that caters to diverse business needs.
Key Benefits of Blended Solutions:
- 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 and the ZEV Mandate targets.
Blended automotive solutions from CBS
A blended car benefit solution built around salary sacrifice and ECOS offers the perfect way to make the transition to electric at your own pace.
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 in a blended approach could help you reach your objectives for 2026 and beyond.
If you want to discuss your current car scheme, get in touch with your CBS account manager today.