Is cash opt-out for you?

With company car drivers becoming increasingly aware of their tax position and employers coming under pressure to offer flexible benefits to attract and retain the best staff whilst balancing costs, cash opt-out schemes are growing in popularity.

Within the Listers Group we see, on average, 6,000 employees per year walking into our sites having been given the cash option but not truly understanding what their cash will buy, the potential tax benefits and importantly the responsibility they are taking on.

The Business Solutions team was created after Listers identified a need to support the company who has allowed their employee to walk into one of our sites by offering a service that ensures their duty of care responsibilities are met, but also supports the employee in making an informed decision about all aspects of car ownership and control.

How they work

The employer gives a cash sum to the employee – supplemented by the savings the employee makes – to purchase their own car. Authorised mileage allowance payments are then made to the employee according to business mileage.

Advantages

  • Removes benefit in kind tax implications
  • Puts the employee into a financially neutral position
  • Employer is exempt from making National Insurance Contributions on the car
  • Tax relief on approved mileage rates (AMAP)
  • Choice of vehicle not limited by BIK taxation

Disadvantages

  • Employee take-up has traditionally been low
  • Can be costly and risky to launch
  • Driver mileage returns vital
  • Cost of driver support can be much higher than expected
  • HM Revenue and Customs take a keen interest in ensuring schemes are compliant

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