The Novated lease has become increasingly popular over recent years, offering benefits to both employees and employers. A Novated lease is a three-way arrangement between an employer, their employee and a vehicle financier, offering an alternative to the standard company car.

The employee leases a motor vehicle of their choice from the financier who then novates the agreement to their employer. From there it is the employer’s responsibility to ensure the monthly lease payments are paid to the financier out of the employee’s gross salary (commonly known as salary sacrifice or salary packaging).

The car is now available for the employee’s unrestricted use, including private use. Other running costs can also be deducted directly from the employee’s gross salary by the employer, offering significant benefits to both.