According to a new study by Volkswagen Financial Services Fleet, businesses are falling behind the employee expectations and demands when it comes Salary Sacrifice Car Schemes.
The VWFS Fleet survey of 2,000 UK-employed adults shows that there is a gap between the availability of Salary Sacrifice Car Schemes and the demand from workers for this cost-effective, tax-efficient benefit.
Results show that only one third (32%) of UK companies currently offer a Salary Sacrifice Car Scheme as an employee benefit. However, nearly half (48% of employees would like to have it as a work benefit.
Dan Wright, Product manager at VWFS Fleet, explains that a Salary Sacrifice Car Scheme – in which an employee “sacrifices” a part of their gross salary (pre-tax), for a brand new vehicle – is a highly valued benefit for both prospective and current workers.
Salary Sacrifice is a cost-effective way for employers to offer employees a new car at incredibly low prices. There are no upfront fees, termination fees, or hidden costs. This includes all additional vehicle costs such as insurance, servicing and maintenance, breakdown cover, etc.
Boosting sustainability and talent retention while driving attraction and retention of talent
Sustainability is more and more in the spotlight, as ambitious climate targets are approaching and employees demand change. If businesses don’t get it right, they run the risk of losing their best talent.
VWFS Fleet’s research shows that 79% employees believe it is important for their employers to be proactive when it comes to being a sustainable company. The younger generations, the next generation talent, are driving the initiative. Deloitte found in a recent study that 55% Gen Z and Millennial employees research a company’s environmental policies and impact before accepting a position, and over 40% of them have changed jobs or plan to due to concerns about sustainability.
VWFS Fleet conducted research to determine the sustainability priorities of its employees. The results showed that a third (33%) view Salary Sacrifice, along with more remote work (48%, as the most attractive eco-friendly benefit.
75% employees also want to reduce the emissions from their commute. Salary Sacrifice is seen as a key factor in this, with 67% understanding how it can help to reduce personal emissions. 65% also agree.
Dan explains that salary sacrifice schemes play a key role in encouraging EV adoption through attractive tax incentives. The Benefit-in Kind (BiK), which is associated with EVs, is only 2%. This rate will remain fixed until April 20,25 and then rise by 1% per year until 2028. This is still significantly lower than the expected BiK rate of petrol/diesel cars, which could reach 30% by 2028.
An opportunity of great importance
VWFS Fleet research shows that employers and HR managers can enhance employee benefits packages to help attract and retain top talent.
Dan continues, “Our research shows that employees are demanding more eco-friendly benefits. Salary Sacrifice is the most popular option for one-third of them ( 33).
Salary Sacrifice allows workers to purchase a new electric vehicle at a reasonable price. This is incredibly important for many people who want to switch to an electric vehicle but cannot afford it. Salary sacrifice is not being offered by employers as much as employees want.
This is a great opportunity for HR managers and employers to increase the remuneration packages of their employees. It will cost them little but have a significant impact on talent retention and attraction strategies as well as sustainability goals.
Visit the VWFS Fleet Salary Sacrifice Guide for more information.
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