Hello everyone
I recently stumbled upon some interesting insights from the Fleet200 Strategy Network (FSN) survey that shed light on a growing inclination towards the adoption of salary sacrifice in fleet management. According to the survey, a substantial 36% of companies surveyed have embraced this practice, with 32% choosing to replace their current company car schemes. Their reasons vary, encompassing sustainability, cost-effectiveness, and improved employee benefits. For those not acquainted with the concept, salary sacrifice schemes empower employees to allocate a portion of their salary for acquiring a new, eco-friendly vehicle. While employees are subjected to benefit-in-kind tax, this is offset by considerable income tax and National Insurance (NI) savings. Employers, in turn, can enjoy Class 1 NI savings.
The potential savings are noteworthy, with businesses anticipating average Class 1 NI savings of £3,000 per electric vehicle (EV). For example, a fleet of 35 EVs under a salary sacrifice scheme could result in savings around £100,000, as indicated by insights from salary sacrifice provider Tusker. This aligns with the British Vehicle Rental and Leasing Association (BVRLA) findings, reporting a 34% year-on-year increase in salary sacrifice cars, totaling 42,616 vehicles in Q4 2022 compared to Q4 2021. Interestingly, the survey notes a higher adoption rate in public sector fleets, where 56% of respondents have embraced salary sacrifice, compared to 31% in private companies. Larger enterprises, particularly those managing over 100 vehicles, appear to be leading this trend, with almost half implementing salary sacrifice, as opposed to only 19% among fleets with up to 100 vehicles.
Even smaller companies are exploring this funding option, with a significant portion already incorporating salary sacrifice, often as a replacement for traditional company car schemes. In my opinion, salary sacrifice seems to be gaining traction as a strategic approach in fleet management. It might be worth considering the feasibility of such schemes in our workplaces, given the potential financial and environmental advantages. I'm contemplating discussing this trend with my boss. What are everyone's thoughts on this, and salary sacrifice in general?
