Council staff in Barnsley could be given the opportunity to sidestep part of their annual National Insurance and pension bill by – typically - £640 under a new car leasing scheme the authority’s ruling Cabinet is being asked to approve.
The council already operates an employee benefits scheme which offers a wide range of perks to staff – with cut price cinema tickets shown to be the most popular at present.
But some benefits also bring tax advantages under the Government’s Treasury rules and an arrangement which allows staff to buy computer equipment on a so-called ‘salary sacrifice’ scheme has seen around £30,000 saved in National Insurance contributions since 2015.
Now the council is looking to expand its staff benefits scheme which, Cabinet members will be told, is regarded as an important part of the offer which allows the authority to recruit and retain the staff it needs.
Car leasing would be a key element of that expansion and would cut bills for both workers and the council because it would be operated as a ‘salary sacrifice’, meaning staff would not pay National Insurance on the money they gave up to pay for the lease, while both they and the council would not have to pay pension contributions on that portion of the salary.
The disadvantage for workers would be that their final pension would be reduced as a consequence of reduced payments and, under the council’s notional calculation, extra income tax of £130 would also be due, but overall it would leave the ‘typical’ employee around £640 a year better off.
The scheme would be more attractive still to staff, because of the attractive leasing rates on offer.
However, the council would also deploy “significant officer time” on implementing and administering the new employee benefits package”, though that would be done by existing staff.
Staff would be barred from leasing diesel cars under the scheme, but there would be no restrictions on the types of petrol powered cars which could be leased, along with other environmentally friendly vehicles.
Almost 3,000 staff are registered for the current employee benefits scheme, creating substantial potential for reduce the overall bill for ‘stoppages’, if large numbers opted to lease vehicles.
The most tax efficient vehicles are those classed as ultra low emission vehicles under tax rules, which may also bring income tax advantages for those who chose to lease them.
A report to the Cabinet states: “By offering any car of choice with the exclusion of diesels, this would give employees a wider variety of choice with the ability to select a car according to their own taste and budget. This may also appeal to a wider audience and maximize the appeal of the car lease scheme.
“Significant officer time will be spent on implementing and administrating the new employee benefit package, depending on take up, which will be contained within existing establishments.
“HR, Payroll, IT, Procurement and Legal will all be involved in the procurement of a provider should the scheme be approved. External tax advice may also be required to ensure the new scheme is compliant with HMRC.
“Any associated costs would be contained within existing resources.”
The council already offers a similar scheme for those wanting to buy bicycles through a salary sacrifice arrangement, with 50 people taking part since it was introduced in 2015.
Under the existing benefits scheme, called Just4YOU, the council also offers reduced price car parking to its staff.
The new suggestion of cheap car leasing comes as the council has introduced a new policy aimed at reducing the number of commuter and school run journeys made in private vehicles in future, to help cut congestion and improve air quality.