Why a car benefit beats cash for employee wellbeing in 2025

A decade or two ago, financial wellbeing benefits were seen as beneficial bonuses. However in 2025, they are no longer a ‘perk’, but a necessity for a high proportion of the workforce. First the global financial crisis, then Brexit, and eventually the Covid-19 pandemic – people are experiencing surging living costs, economic uncertainty, and sky-high housing options. As a result, employees now need financial support especially as pay increases are more difficult to deliver for organisations. This can leave organisations without comprehensive financial wellbeing packages at a significant disadvantage in attracting and retaining top talent.

One benefit that proves to be continuously effective in elevating employee wellbeing is the offer of a car. The offer doesn’t have to be restricted to traditional Company Car/Fleet/Essential User drivers or senior employees, but can be offered to all via salary sacrifice  – where workers exchange a fixed monthly amount of pre-tax salary for a brand new car, complete with insurance, road tax, replacement tyres, and routine servicing. 

But why does offering a car benefit beat handing out cash? This article will explore why this benefit prevails as a strategic choice for organisations aiming to improve employee wellbeing, productivity and attract talent.

Financial health is a critical pillar of employee wellbeing

Financial wellbeing is much more than just having enough money. It’s also about:

• Feeling secure and in control of daily finances
• Having the financial freedom to make meaningful life choices
• Reducing stress associated with money worries

Recent research reveals the vast number of employees with poor financial health: 49% do not feel confident dealing with their everyday money, 1 in 3 have less than one month’s savings and 67% of employees who are expecting a child feel insecure about their finances. This is more than just a personal issue, it’s a business issue – 42% of employees are seeking a second job, and 52% admit that financial pressures impact their job performance.

Businesses that fail to support their employee’s financial wellbeing risk poor productivity, engagement and focus, so financial benefits are becoming increasingly essential to organisational success.

So, why choose a Car Benefit?

1. Tax efficiency and cost savings

When structured as a salary sacrifice scheme, car benefits allow employees to pay for their new Ultra Low Emission Vehicle (ULEV) using pre-tax income. This delivers significant cash savings by reducing their taxable salary, and consequently, the amount of income tax and National Insurance contributions they owe. This is a win for both employees and their employer:

• • Employees keep more of their earnings using car schemes, whereas cash rewards are taxed, meaning employees get less.
  • Employers save on National Insurance contributions by reducing employees’ taxable income, enabling them to reinvest in other benefits and pay increases.

2. Greater buying power and flexibility

Employers can offer car benefits through salary sacrifice schemes, allowing employees to access vehicles at lower costs by paying pre-tax. By utilising providers’ superior buying power, employees can often get better deals than they could on the high street, reducing financial pressure while making higher-quality vehicle options more accessible and rewarding.

3. Reduced financial stress

A major cause of employee stress is unpredictable or large expenses. Car benefits packaged with maintenance and insurance offer peace of mind, allowing employees to avoid the large upfront costs and unexpected bills often associated with buying a new vehicle. Combining different providers in one package also relieves the stress of having to find the best deals, and manage multiple vehicle bills at once, leaving employees with more time to focus on themselves and their work. The schemes are also beneficial to employees spending a high proportion of their salary on costly and continuously rising public transport options. 

4. Encourages sustainable choices

With growing demands for employers to pursue sustainability, car benefits take environmental concerns head on by encouraging the use of the wide range of electric and Plug In Hybrid  vehicles classed as ULEVs. This is done by making electric vehicles more accessible through tax savings, with many being unaffordable for much of the workforce outside of the scheme. This allows employers to promote greener options that can align with employees’ values and contribute to corporate sustainability goals, while simultaneously saving money.

How this fits into broader financial wellbeing support

While an excellent choice to support employee financial health, the car benefit should be part of a wider financial wellbeing strategy. For example, it complements:

• Employee discounts and lifestyle benefits that help manage daily costs.
• Workplace savings and low-cost loans for medium-term financial security.
• Pension contributions and retirement planning to ensure long-term financial health.

By offering a comprehensive financial package, employers not only improve retention and engagement but also enhance productivity and reduce absenteeism linked to financial stress.

Key takeaways

• Simply giving employees cash increases their taxable income and reduces what they are rewarded as the cash is also taxed at the employee’s prevailing rate. This does very little to reduce financial stress.
• A car benefit, structured through salary sacrifice, is tax-efficient and lowers the total cost of driving.
• Employees gain financial predictability and a reduced need for financial planning which can improve overall wellbeing.
• Offering sustainable vehicle options aligns financial benefits with environmental and corporate responsibility goals which are increasingly important to talent, particularly those who value purpose more than ever before.

Nowadays, supporting employees’ financial wellbeing has moved beyond the paycheque. Tusker’s salary sacrifice car scheme enables employers to offer a brand-new, all-inclusive vehicle package that delivers substantial (cash?) savings. This enhances employee wellbeing, supports sustainability objectives and provides employees with an exciting reward that supports loyalty to your organisation.