New research from leasing company, Volkswagen Financial Services (VWFS) Fleet, reveals businesses are lagging behind employee demand and expectation when it comes to Salary Sacrifice car schemes. This sustainable and low tax workplace benefit is found to be attractive to nearly half of the UK workforce…
VWFS Fleetโs survey of 2,000 UK employed adults shows a clear gap between access to Salary Sacrifice car schemes and worker demand for the cost-effective and tax-efficient workplace benefit.
The results reveal that just one third (32%) of UK businesses currently offer a Salary Sacrifice car scheme as a benefit, yet nearly half (48%) of workers would like it as a workplace benefit.
โA Salary Sacrifice car scheme โ where an employee โsacrificesโ part of their gross (pre-tax) salary for a new vehicle โ is a highly valued financial benefit for prospective and existing workers,โ explains Dan Wright, Product Manager at VWFS Fleet.
โAt minimal cost to the employer, Salary Sacrifice offers employees affordable access to a brand new vehicle, with no upfront payments, early termination fees or hidden costs. It also includes all extra vehicle costs, including insurance, servicing, maintenance and breakdown cover.โ
Driving talent attraction and retention with sustainable & low tax workplace benefit
Business sustainability is increasingly placed under the spotlight โ with ambitious climate targets approaching and employees demanding change. And thereโs a significant talent risk afoot if businesses fail to get this right.
VWFS Fleetโs research highlights that 79% of employees feel itโs important for their employer to be proactive in being a sustainable business. And the younger generations โ the next generation of talent โ are leading the drive. In fact, Deloitteโs recent research found that 55% of Gen Z and Millennial workers research a brandโs environmental impact and policies before accepting a job, and more than 40% have already or planned to change jobs due to sustainability concerns.
With just 2% Benefit-in-Kind tax EVs are sustainable & low tax incentives
Looking at specific sustainability priorities, VWFS Fleetโs research found that one third (33%) of employees view Salary Sacrifice as the โmost attractive eco-friendly workplace benefitโ, alongside more opportunities to work remotely (48%).
It also found that 75% of employees want to drive down the emissions associated with their commute. And many see Salary Sacrifice as having an important role here โ with 67% recognising that it helps to provide affordable access to electric vehicles (EVs) and 65% understand how it helps to reduce personal emissions.
โSalary Sacrifice schemes have a crucial role in incentivising EV uptake through attractive tax incentives,โ expands Dan. โThe Benefit-in-Kind (BiK) associated with EVs is currently just 2%, fixed until April 2025, then rising by just 1% each year until 2028. This remains significantly below the anticipated BiK rate for petrol/diesel vehicles, which could exceed 30% by 2028.โ
A crucial opportunity in the race to recruit sand retain talent
Amidst the current talent recruitment and retention struggles, VWFS Fleetโs research highlights a key opportunity for employers and HR managers to bolster the employee benefits package to attract and retain top talent.
โOur research highlights the strong demand from employees for sustainable workplace benefits, with Salary Sacrifice the most in-demand eco-friendly benefit for one third (33%) of employees,โ continues Dan.
โSalary Sacrifice provides workers with affordable access to a brand-new electric vehicle, which, for many, is an important transport transition they wish to make, but struggle to afford. However, there is currently a significant lag behind employee demand for Salary Sacrifice and employer provision.
โThis presents a crucial opportunity for employers and HR managers to add to their employeesโ remuneration package โ with minimal cost to the business, but significant effects on talent attraction and retention strategies, as well as wider sustainability goals.โ
For more information, visit VWFS Fleetโs Salary Sacrifice guide.
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