What is business leasing?

Business leasing means that the company will not own the car, but instead leases the car for a period of 2, 3 or 4 years. The cost of the business lease is based on term of the lease, the number of miles driven during the term, any upfront initial rental and whether or not there is a servicing and maintenance plan included in the contract.


The company must ensure that any business lease cars or vans are serviced and maintained to the manufacturer’s guidelines during the duration of the lease; that the vehicle is insured on the company’s insurance and that the driver has a full driving licence.

At the end of the contract, the car will be inspected using the British Vehicle Rental and Leasing Association Fair Wear and Tear Guide and then the vehicle is collected and returned. A new lease car or van then replaces it.

It’s worth pointing out that if one of your employees drives a company lease car, they will be liable for company car tax or, to give it its correct title, benefit-in-kind tax. However, many organisations are now leasing electric vehicles, as they have significantly lower benefit-in-kind tax than traditional petrol or diesel vehicles. They can also support organisations with their environmental, social and governance (ESG) requirements, due to zero emissions on fully electric vehicles.

One other alternative many businesses are now considering is operating a Salary Sacrifice Car Lease Scheme for their employees. This is a great perk to retain and recruit talent in an organisation and offers great value for both employees and businesses. In short, an employee agrees to “sacrifice” part of their salary in exchange for a lease vehicle. This offers the employee savings on income tax and offers the business savings on national insurance contributions.