Salary Sacrifice

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Finding the most cost effective way to run a fleet is no easy task. There are often compromises to be made by employees and businesses. No one solution works for everybody, but one of the hot topics raised at ABAX's fleet seminar was salary sacrifice.
Salary Sacrifice on Company Cars - ABAX

The ABAX seminar, held at the home of Peterborough United, allowed customers, businesses and the general public to hear the expert views of ABAX and Bulley Davey Accountants on how to cost effectively run a vehicle fleet.

Salary sacrifice in essence is set up so employees can pay part of their gross salary towards the purchase of a vehicle but make significant savings through income tax and National Insurance.

The benefits of a car salary sacrifice scheme are;
    • Vehicles can be offered at no cost to the employer
    • Manufacturers and contract hire companies can offer reduced rates
Unlike childcare vouchers or additional pension contributions, company cars brought through salary sacrifice are still eligible for benefit in kind tax so the lower the co2 emissions on the vehicle, the lower the tax likely to be paid. It is also worth taking into account the tax rate paid by the individual.

Sacrificing part of your salary means you earn less and this might affect maternity pay as well as mortgage applications. Because your salary is lower as a result of salary sacrifice, any life cover through a scheme at work could be less if it’s based on your post-salary sacrifice level. It’s worth checking – some employers do provide life cover at the pre-salary sacrifice pay level so you don’t lose out.

If you require further advice, Bulley Davey offers a wide range of services and expertise within the field.

/ Chris Miller

Salary Sacrifice on Company Cars - ABAX