Salary Sacrifice Vs Company Car

Which is best for you?

When it comes to driving a new car through your employer, two popular options often come up: the traditional company car and the increasingly popular salary sacrifice scheme. Both have their upsides, but depending on your personal circumstances, one may suit you better than the other.

Let’s explore the key differences to help you make an informed decision.

What Is a Company Car?

A company car is a vehicle provided by your employer for business and, often, personal use. It’s typically owned or leased by the company, and you’re taxed on the benefit of using it - known as Benefit-in-Kind (BiK) tax.

Pros of a Company Car:

• Convenience: The company handles the lease, insurance, maintenance, and sometimes even fuel depending on where you work.

• No Upfront Costs: You don’t pay anything upfront, and there’s no impact on your personal credit.

• Business Use: Ideal if you drive a lot for work - mileage and wear are covered by the employer.

Cons of a Company Car:

• Tax Implications: BiK tax can be significant, especially for higher-emission vehicles.

• Limited Choice: You may have to choose from a pre-approved list of vehicles.

• Not Always Flexible: If your role changes or you leave the company, the car usually stays behind.

What Is a Salary Sacrifice Scheme?

A salary sacrifice car scheme allows you to exchange part of your gross salary in return for a brand-new car. The scheme, including the one from TCH Salsa, is typically all-inclusive - covering insurance, servicing, maintenance, and breakdown assistance. It's often used to access electric or low-emission vehicles.

Pros of Salary Sacrifice:

• Tax Efficiency: Payments are taken from your gross salary, reducing your income tax and National Insurance contributions.

• All-Inclusive Package: One fixed monthly amount covers everything, meaning no surprise bills.

• Access to EVs: Many schemes focus on electric vehicles, which attract lower BiK tax rates.

• Large Range of Vehicles: Our salary sacrifice scheme offers a huge range of vehicles to choose from, whether that be an EV, hybrid, or internal combustion engine, we're sure to have a vehicle to meet your needs and desires.

Some Things to Consider:

• Impact on Salary: Your gross salary is reduced, which could affect things like mortgage applications or pension contributions.

• Commitment Period: Most schemes have a fixed term, so it’s worth checking the early termination policy.

• Eligibility: Not all employers offer salary sacrifice, and eligibility may depend on your salary level after the sacrifice.

Which Option Is Right for You?

Choosing between a company car and a salary sacrifice scheme depends on your driving habits, tax bracket, and personal preferences. If you value simplicity and don’t mind a limited choice, a company car might suit you. But if you’re looking for a tax-efficient way to drive a brand-new, environmentally friendly vehicle with minimal hassle, salary sacrifice could be the smarter choice.

At TCH Salsa, we specialise exclusively in salary sacrifice car schemes, helping employees drive greener, smarter, and more affordably. If you're curious about how it could work for you, we’re here to help.

Speak to us today