The employer, employee and financier sign a novation agreement whereby the employer agrees to take on the employee’s obligations under the lease. Under this arrangement, the employer makes the monthly lease payments on behalf of the employee. Should the employee leave his or her employment for any reason, the novation agreement ceases and the obligations assumed by the employer revert to the employee as the registration is in the employee’s name.
The choice of vehicle remains with the employee ensuring a vehicle to fully meet their needs.
The employer deducts a portion of the vehicle financing and running costs from the employee’s pre tax income reducing the employee’s taxable income and the amount of tax payable. There is no need for the employee to do anything on their tax returns as the employer and lender attend to this.
If a vehicle is purchased using another form of finance, 100% of the costs will be taken from after tax income providing no tax benefit at all. With the option of a fully maintained lease, vehicle running costs such as maintenance, registration, insurance costs and projected fuel can also be included in regular salary deductions.
Assurance Finance and Business Solutions can also assist with finding the right vehicle as well as offering fleet discounts on the purchase price and running costs.