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Since the publication of a report by the British Vehicle Rental and Leasing Association, the issue of grey fleet has been thrust back into the limelight.
Following on from our eight tips to reducing grey fleet, here are 11 benefits to car salary sacrifice schemes, a popular alternative.
Salary sacrifice schemes allow companies to offer employees the option to give up part of their monthly pay packet in return for a newly-leased salary sacrifice car. Because the cost of the vehicle is taken before taxes are paid, employee income tax and national insurance contributions are reduced, as long as the cost of the vehicle does not mean the worker's monthly income falls below the minimum wage threshold.
It's not just cars that can be offered under 'salsac' schemes either - some businesses offer railway season tickets, parking spaces, and gym memberships too.
Because car salary sacrifice schemes are low-cost or don't cost employers anything to introduce, anyone within a business can apply for a vehicle, assuming their wage doesn't go below a minimum threshold, unlike some company car schemes which are only offered to senior members of staff.
Chances are if you're looking at a salary sacrifice service, you'll be swapping out of your own grey fleet vehicle. According to last month's BVLRA report, salary sacrifice cars emit an average of 103g/km of CO2, are 1.3 years old and 75% have five Euro NCAP stars, compared with 8.2 years old, 152g/km of CO2 and just 9% for grey fleet vehicles.
Most leasing deals and schemes will bundle roadside assistance, maintenance and insurance into the monthly cost, meaning that the only thing a staff member will need to pay (when not on business) is for their own fuel once the monthly cost has been taken care of.
If you join a car salary sacrifice scheme the monthly cost of the car is deducted straight from your earnings, so there's no need to have to put aside a certain amount of money each month to pay for a contract, and/or insurance, like you would do with a grey fleet or company car making it much easier for some to manage their finances.
A salary sacrifice car is properly maintained, and is brand-new, meaning fleet managers can be safe in the knowledge that the car has been fitted with the latest, clean engines, and the car has been serviced correctly at the right intervals. New cars are also fitted with the latest advanced safety kit such as autonomous emergency braking systems and lane-keeping assist tools, making the cars usually safer than the grey fleet vehicles they are replacing.
Employers don't have to pay national insurance contributions on the amount that has been sacrificed, and Tusker, a leading salsac provider, claims companies save an average of £180 a year in employer national insurance contributions per car.
For those who are recruiting, or those seeking work, a brand-new vehicle at a reduced cost (as employees are able to use corporate finance discounts to secure a deal) is a nice bonus to have, especially for businesses with a high turnover of staff as the lure of a new car may stop employees wanting to up sticks.
Some leasing companies will offer web portals which show quotes, orders and authorisation processes in the same place.
Their portals often link into expenses payments and can automatically track journeys, meaning it can be easier to work out which trips have been made for work purposes.
As well as the benefits of being able to retain and attract new members of staff more easily, the low emissions of salary sacrifice cars means the business is sending out a strong message with regards to overall corporate responsibilities.
Most schemes run for three to four years, meaning long-serving members of staff will receive a new car every few years. At the end of the contract, the leasing company will generally take the car away too, meaning the staff member or business doesn't have to go through the hassle of remarketing it.
If employees pick a salary sacrifice car, chances are it will be packed with the latest connectivity and safety technology, such as Apple CarPlay and semi-autonomous driving modes, meaning the car is likely to be more up to date, safer, and more advanced than the grey fleet vehicle it replaces.
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