Green Car Scheme – A Salary Sacrifice Car Lease Scheme That Benefits Everyone


Under the salary sacrifice green car scheme, employees can make huge savings on a new car by reducing their gross salary through a salary sacrifice arrangement. The scheme is a great way to enjoy a new, fully insured and maintained car, save on tax and national insurance and reduce your carbon footprint at the same time. It’s a win win scheme for both employee and employer…read on to find out more.

The Green Car Scheme is a new and innovative employee benefit, born out of the Government’s introduction of a 10% band for benefit in kind taxation on low emission vehicles. Designed to provide employees with a brand new, fully maintained and insured car, but at a significantly reduced cost, the scheme represents a very attractive proposition for both employee and employer. As an employee the scheme can save you thousands of pounds on a new car when compared to high street deals, and as the scheme is cost neutral and fully managed, there is little administration and risk on the part of the employer.

So, how does the Green Car Scheme work?

The Green Car Scheme is underpinned by a salary sacrifice arrangement. Salary sacrifice is a contractual arrangement whereby an employee gives up the right to receive part of their cash remuneration, usually in return for their employer’s agreement to provide some form of non-cash benefit, in this case a car. As the salary sacrifice comes out of gross pay the employee is able to save on income tax and National Insurance Contributions.

The level of CO2 emissions on the car chosen is important as it determines the benefit in kind tax to pay on the car (the non-cash benefit). The more environmentally friendly the car is, the greater the savings will be.

So, what are the benefits to the employer, employee and the environment?

Employer benefits of the Green Car Scheme.

• Fantastic employee benefit.

• Low risk – the green car scheme is cost neutral to the company.

• Environmentally friendly – reduces the company’s carbon footprint.

• Promotes employee loyalty.

• Increases employee morale.

• All administration is handled by the scheme provider.

• All cars are managed by the scheme provider.

Employee benefits of the Green Car Scheme.

• A brand new, fully managed and insured car.

• Significant savings when compared to high street deals.

• The more environmentally friendly the car, the better the savings.

• Special manufacturer negotiated discounts.

• Significant fuel savings using a more efficient car.

• VAT discounts.

• Tax efficient benefit.

• No credit checks.

• Gap insurance (prevents a situation of negative equity).

• No capital or deposit required.

• Provider can part-ex the current car or capital can be used to offset monthly payments.

• One convenient monthly payment covers everything:

   o 3 year warranty and maintenance

   o Servicing

   o Roadside Assistance

   o Insurance 

Environmental benefits of the Green Car Scheme.

• Carbon dioxide (CO2) is the most important greenhouse gas. 

• Emissions of CO2 are directly linked to fuel consumption. 

• Transport CO2 emissions in the EU grew by 32% between 1990 and 2005.

• Emissions from so-called ‘light duty vehicles’ (passenger cars and vans) are responsible for approximately half of this.

These figures could all be reduced considerably if we all drove more fuel efficient cars. Moving to a more fuel efficient and less polluting car also saves you money. An average motorist doing 10,000 miles per year will save approximately £1,000 per year in fuel alone by switching from an (average) 25mpg car to a (average) 50mpg car.

As you can see the benefits of running a Green Car Scheme are significant for all parties concerned.


Source by Let