What is Salary Sacrifice?

It's not as painful as it sounds! But as the name suggests, these schemes involve employees giving up part of their salary in return for another benefit - in this case a new, fully-maintained car.

Better known for providing options to increase pension payments, salary sacrifice schemes are now used to deliver other employee benefits, including child-care vouchers, bikes and work-place car parking. And what's more, there are positive tax implications for both employer and employee.

How does it work?

An employee makes a regular payment on the lease of the vehicle, direct from their gross salary entitlement. This reduces their salary and therefore cuts the National Insurance Payable on both sides.

The vehicle contract is with Grosvenor, but delivered through the employer, therefore giving the employee the opportunity to enjoy a new car with the cost advantages that come with Contract Hire agreements.

Benefits...

Savings are achieved on National Insurance, as contributions are only paid on salary, not the benefits - so lower salary, lower NI.

The employee also enjoys the NI savings in addition to a decrease on income tax. Salary sacrifice for car schemes also give enhanced options as part of an employer's flexible benefits packages and can help in managing the "grey fleet".

The Grosvenor salary sacrifice scheme, SWITCH, is cost-free for the employer.