Understanding the benefits of car benefit schemes


Balancing the need to provide good quality benefits with the cost of provision is a challenge for almost all companies in the UK today.

Following the Government’s announcement that the tax advantages of most salary sacrifice schemes will fall away on April 5th, car benefit schemes are becoming even more attractive as low emission vehicles will be retaining all the tax advantages for both employers and employees.  

Put simply, car benefit schemes are provided to organisations in the UK which enables them to offer their employees a brand new car, complete with insurance, road tax, servicing, maintenance, tyres and breakdown cover, all for a fixed monthly amount which is taken from their pre-tax salary. The only thing the driver has to do, is add fuel.

Car benefit schemes, together with Cycle to Work and childcare vouchers, continue to provide tax efficiencies for organisations and individuals, particularly if a driver chooses a ULEV, a car with CO2 emissions of less than 75g/Km. Drivers are able to save National Insurance on all cars, with the added benefit of tax on lower emitting cars, and organisations are able to offer this benefit at no cost to themselves.

It helps organisations to meet their Duty of Care requirements, and gives employees the opportunity to drive a brand new car - 70% of Tusker drivers felt that this was the only way they’d be able to afford a new car.

Benefit providers are effective in managing the implementation and on-going support of the scheme. With cutting edge technologies supporting their development of schemes, organisations really do have minimal contributions to make during the lifetime of the scheme, with nothing more to do other than verifying employee details, eligibility and helping to promote the scheme to their employees.

There are sometimes hesitations from organisations due to the perceived risks involved in entering into company car agreements. As a result, some providers offer a range of protections in place which can be added to schemes to make them as worry-free as possible. These can cover changes in an employee’s personal circumstances, including redundancy and resignation, maternity leave and long-term illness.

Benefits to Employees

Car Benefit Schemes provide an all-inclusive package. A brand new car, which the employee chooses and specifies, complete with insurance, road tax, breakdown assistance, tyres, servicing and maintenance. All the driver has to do, is add fuel.

There’s no deposit and no credit check, and with the buying power of scheme providers, savings are maximised with substantial discounts from manufacturers.

It offers complete peace of mind. It’s worry free motoring. And should circumstances change, employees can hand the car back (after any exclusion period and depending on the protections the employer has in place).

Benefits to Employers

  • Provides a fully administered, cost-free service including implementation and marketing
  • Maximises Class 1a NI Savings - typically £250-£500 p.a. per employee selecting ULEVs.
  • Mitigates risks with a range of protections for resignation, redundancy, maternity and illness.
  • Offers a highly tangible employee benefit which can motivate, retain and attract employees. Adheres to environmental policies with this carbon neutral scheme, actively promoting low CO2 cars.
  • Meets duty of care requirements with the provision of safer, more reliable, affordable cars.

This article was provided by Tusker.


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