June 7, 2021

Why salary sacrifice represents the way forward

Willmott Dixon CFO explains why the business decided to change its car funding policy.

Salary sacrifice (sal/sac) has enjoyed a renaissance over the past year, as a growing number of employers tapped into the low benefit-in-kind (BIK) tax rates to launch schemes as part of flexible benefits packages.

Some have also started to consider sal/sac as a viable alternative to a traditional company car scheme, helping to speed up a move to ultra-low emission vehicles (ULEVs) or to unlock the national insurance contributions (NIC) savings.

Construction and property services business Willmott Dixon switched its car funding policy from a standard three-year operating lease to a sal/sac scheme at the start of the year.

The scheme was built and launched during the heights of the Covid pandemic by fleet management company CLM in consultation with Willmott Dixon’s sustainable transport team, chaired by chief financial officer Graham Dundas.

Dundas has been involved with the car fleet since joining the business as a management trainee more than 20 years ago. His first input was to be part of the project team which migrated the outsourcing of its fleet
management provision to CLM; it’s been the company’s principal partner ever since.

CLM oversees the day-to-day management of the car fleet and driver engagement with the two companies working together to agree the fleet policy and car choice list.

“We consider what we want to achieve with our fleet strategy and consult with CLM who implement and run it for us,” Dundas says.

“We don’t employ anyone who spends a material part of their time worrying about company cars and fleet management. CLM is the specialist and this allows us to focus on the day job”

Graham Dundas, Willmott Dixon CFO

“It’s been a strong relationship for more than two decades.”

Historically, Willmott Dixon ran a traditional lease scheme utilising a panel of funders for competitive pricing through CLM.

The first question asked of qualifying employees was: cash or car? Everyone got a straight choice with qualification criterion  dependent on the need to travel in their individual roles.

Around 450 staff opted for the car; another 1,050 chose cash and slid into the grey fleet.

In September, the Willmott Dixon team started working with CLM on a project to design and implement a salary sacrifice replacement for the lease car scheme.

The primary driver was a new Willmott Dixon sustainability strategy called Now or Never which introduced a series of ambitious targets, including becoming net zero by 2030 without offsetting (the company has been carbon-neutral since 2012 with offsetting). This involves moving to a 100% electric fleet.

The sustainable transport group focuses on ways to drive down emissions and incentivise staff to choose environmentally-friendly cars.

Learnings came from the pandemic. The successful deployment of Microsoft Teams to replace face-to-face meetings previously held nationwide convinced the company to aim for a 60% mileage reduction against pre-Covid levels. Supporting this target is the introduction of a home working allowance and agile working as part of a suite of complementary benefits products.

Follow the link to read the full article in Fleet News 27/05/2021