You may have been considering introducing novated leasing into your business, or maybe one or more staff members have approached you to discuss its availability. Whatever the case, providing your employees with the opportunity to get their new vehicle through novated leasing can be wonderfully beneficial to your business.
Whether you have 10 employees, a thousand or even more, it can be a very attractive option for current and prospective staff alike, which may allow you to recruit and retain your workforce at a higher level by offering them this benefit.
So let’s take a look at what novated leasing is all about, and how it can benefit both your business and your employees.
What exactly IS a novated lease?
Put as simply as possible, a novated lease includes both a financial lease and novation agreement between yourself, an employee and a lender. As part of a salary package, the employee is able to purchase a vehicle where the repayments are paid by the employer (you) out of their pre-tax pay which is all sorted out via payroll.
This can mean through a small amount of initial paperwork and some administrative actions at payroll level, you’re able to offer employees a higher salary at minimal (or even no) cost to your bottom line.
There are a few types of novated leases out there. Here’s some background on the two most popular options should your employees ask:
Self-managed novated lease
This option, as the name suggests, means your staff take care of everything themselves. From running costs (fuel, servicing, etc.) to negotiating with dealers, sourcing financing and organising their own insurance, it’s all up to them. This also includes all the admin involved with the employer (you) and the lender. Truthfully, if they haven’t had any experience with this stuff, it can be a real headache.
Fully maintained novated lease
Your employees can essentially sit back and let the novated lease provider sort everything out for them! Everything they’d have to do themselves with a self-managed novated lease will be taken care of, removing all of the stress. Better still, if they choose a novated lease provider with a ton of experience and industry connections (ahem, like Stratton Finance), they’ll find themselves in their new car much sooner, and with the lowest possible repayments.
What are the benefits of a novated lease?
As we said earlier, you may be able to offer employees a higher salary without actually affecting your bottom line. Also, the incentive of novated leasing can help to attract and retain staff in your workforce.
"You’re able to offer employees a higher salary at minimal (or even no) cost to your bottom line."
In addition to not having to pay GST (yep, that’s right - a 10% saving right off the bat), because they’re paying off the car with pre-tax income they’ll be paying tax at a lower rate. And when they go with the fully maintained novated lease, everything’s included in the repayments. That means they don’t need to worry about budgeting for registration, insurance, servicing costs or even fuel - a great way to simplify cash flow.
Learn more about novated leasing today
If you have any questions about what you’ve read in this article or you’d like to find out more about novated leasing in general, visit our page to calculate your savings or get on the phone with the best in the business - Stratton Finance - on 1300 787 288. We’ve been working with businesses and employees alike for decades, and will arrange everything so you can focus on the more important things.
If you’d prefer, send us an online enquiry and we’ll be in touch soon.