Andrew Leech, managing director of Fleet Evolution, on the future for salary sacrifice.

Andrew Leech, managing director of Fleet Evolution

Does salary sacrifice have a future since the Government’s Budget 2017 confirmations of the changes?

Yes, definitely. The impact of the tax changes to salary sacrifice schemes does not outweigh the tangible benefits of implementing a well-constructed car benefit scheme for both employers and employees.

We’re seeing plenty of interest in our salary sacrifice car schemes as increasing numbers of employers realise that the impact of the changes is typically cost-neutral.

In the majority of cases, there has been little or no increase in the amount that employees pay and we are pleased that we have clarity from the Government that cars will continue to feature as a valuable employee benefit going forward.

We also believe there has been a complete misunderstanding in the corporate world, and especially in the provision of corporate benefits, that salary sacrifice has now been priced out of the employee benefits equation.

In fact, nothing could be further from the truth. Of the 3,000 new models currently available on the Fleet Evolution database, less than 5% have seen a price increase since Government introduced new salary sacrifice tax rules in April 2017.

Does salary sacrifice suit all employees?

We believe salary sacrifice cars can provide the perfect answer for employees who need the mobility but do not have the pay levels necessary to fund a new car through other financial arrangements, such as Personal Contract Purchase (PCP), as well as opening the door to new car ownership for many employees for the first time.

Analysis of the Fleet Evolution fleet reveals that 82% of employees who have taken a car through the scheme had never had a new car before.

Under our salary sacrifice scheme, all the stress involved in running the car is removed. The key features include all servicing and repair costs, road fund licence, fully comprehensive insurance, corporate discounts and no deposit.

We handle all the administration and our buying power allows us to acquire the vehicles at highly attractive front-end prices which we pass on to employees, but which they would never be able to access in their own right.

We also remove all the stress caused by the unexpected repair, servicing or MOT bills often associated with older cars and for which many employees have to resort to payday lenders to successfully resolve.

What does your new fleet management product bring to the industry and who are you targeting?

Our all-embracing stand-alone fleet management service has been launched to meet increasing demand from fleet customers who want a more flexible,

personalised service.

We have seen the fleet management suppliers move away from providing top quality, personalised service to one that is purely based on price – and that is not necessarily the best thing for the customer.

What we are looking to be is different by providing a service that fleet customers actually want, that fully meets their every fleet need – rather than one that just ticks a box.

We know that, through the services we already provide to salary sacrifice customers, we have developed a track record of delivering up to a 30% reduction in fleet running costs whilst improving the service for the customer, employees, drivers and suppliers. We are now extending that approach to a wider audience.

You tend to focus on the SME sector. What USPs do you bring?

While other salary sacrifice providers shy away from SMEs, Fleet Evolution actively targets small to medium-sized businesses. Our smallest customer has just 17 employees while our largest has more than 2,500.

Other providers have traditionally had less success with smaller employers as they demand more employer resource for administration which smaller companies generally cannot spare or do not have in the first place. Hence, other providers shy away from the SME sector.

However with Fleet Evolution, whether it is salary sacrifice or fleet management, we are able to largely take away all of the administrative burden from both the HR and fleet functions – which undoubtedly increases the appeal of both services to smaller companies.

They know they can rely on us for a hassle-free service and, with salary sacrifice, we will also bear the risk on early termination which many of our competitors outsource.

As we are prepared to take the risk ourselves, this in turn allows us to carry out an implementation for our clients within half a day typically, provided they agree to our standard rules – and 95% of them do.