Salary sacrifice is a financial arrangement where an employee agrees to give up part of their salary in exchange for non-cash benefits. These benefits can include contributions to a workplace pension, a Cycle to Work scheme, or a car, among others.
By using salary sacrifice, employees reduce their taxable income, which lowers their income tax and National Insurance contributions. Employers also save on their National Insurance costs and may choose to invest these savings back into the employee’s pension or pass them back to the employee.
SalSac is a specialist company that offers salary sacrifice options, especially for dealerships and car manufacturers looking for alternatives to employee car ownership schemes (ECOS), especially as tax changes are anticipated in the forthcoming budget.
SalSac can quickly set up salary sacrifice options for internal staff fleets and later offer them to external customers. Richard Quilter, the sales director at SalSac, has noticed growing interest from dealerships as ECOS is phased out. They have partnered with TrustFord to start internal salary sacrifice schemes, which have seen strong initial interest.
As ECOS is set to end, SalSac presents a tax-efficient, low-administration solution for businesses unsure about company cars. In the upcoming Autumn Budget, there are proposals to change how ECOS vehicles are taxed for company cars, which could impact around 76,000 employees across 1,900 companies. The Society of Motor Manufacturers and Traders (SMMT) has warned that this change may hurt the automotive sector since ECOS has helped lower prices on new vehicles for employees.
Richard, highlighting also the need to find a replacement scheme quickly, noted that it can take 1 to 7 months to implement.
Initially targeting brokers, SalSac has expanded to around 60 partners, including key funders and employers. now sees dealer networks and original equipment manufacturers (OEMs) as areas for growth, emphasising the importance of having employees drive brand vehicles to improve support and knowledge, particularly for new brands in the UK.
By providing a “Salary Sacrifice” product, SalSac provides a white-label platform for partners and a multi-funder system that enables quick quotes and manages all paperwork for employers and employees.
Concerned about possible changes in the Autumn Budget on 27 November that could affect salary sacrifice schemes, Salsac warns it may slow down the adoption of electric vehicles (EVs). He believes the current benefit-in-kind (BIK) rules for EVs should remain unchanged, arguing that sudden increases in BIK taxes could make salary sacrifice agreements less affordable for employees and create challenges for employers.
Richard has additional products in the pipeline to expand salary sacrifice schemes to home energy products, such as solar panels and battery storage. This could help EV drivers by combining home charging and energy solutions into one plan.
For more you can visit SalSac online here: https://www.salsac.co.uk/
FAQ’s…
What is salary sacrifice, and how does it benefit employees and employers?
Salary sacrifice is a financial arrangement in which employees give up part of their salary in exchange for non-cash benefits, thereby reducing their taxable income and lowering their income tax and National Insurance contributions. Employers also benefit by saving on National Insurance costs.
How is SalSac assisting businesses in adapting to changes in employee car ownership schemes?
SalSac offers salary sacrifice options as a low-maintenance, tax-efficient alternative to traditional employee car ownership schemes, especially as EcOS is phased out. It provides a quick setup for internal fleets and external partners.
What potential impact could upcoming tax changes have on salary sacrifice schemes and electric vehicle adoption?
Upcoming tax changes in the Autumn Budget could modify benefits-in-kind (BIK) rules for electric vehicles, potentially making salary sacrifice agreements less affordable and slowing the uptake of electric vehicles among employees.
Who are SalSac’s main partners and target markets?
SalSac has partnered with dealerships such as TrustFord and aims to serve dealer networks, OEMs, brokers, and employers, seeking to broaden its salary sacrifice solutions for internal staff fleets and external customers.
Are there plans to expand salary sacrifice schemes beyond vehicles?
Yes, SalSac is creating additional products to expand salary sacrifice schemes to home energy items such as solar panels and batteries, which could help EV drivers with integrated home charging and energy solutions.
