Services and Funding
More and more companies are choosing to acquire vehicles through some form of funding agreement rather than buying them up front. They have a choice of either purchasing or leasing them.
Both forms of funding usually involve paying a regular amount over a contracted period, typically three years or 60,000 miles in the case of company cars.
Purchase-based funding methods include hire purchase and contract purchase. Lease-based methods include contract hire and finance lease.
Before opting for a funding method, an organisation needs to consider the overall cost of each approach, the flexibility it provides, how it will affect the balance sheet and what the potential tax implications are
Salary Sacrifice
Salary Sacrifice
GKL Leasing are pleased to have formed a partnership with Fleet Evolution to carry out the very best in experiences for implementing your new Salary Sacrifice Scheme. We work closely with Fleet Evolution to provide hassle free systems and best practice procedures as a valued customer.
Find out more here https://gkluk.com/salary-sacrifice/
To book a consultation, whether you run 3 or 300 vehicles, please use get in touch with us to arrange a no-obligation appointment.
Business Vehicle Consultation
Business Vehicle Consultation
As a valued customer, you will receive a fleet consultation to help you make the best decision for your fleet.
This involves a meeting for 45 minutes to discuss your current vehicles, including:
- What work they do
- Why they work
- How they are funded
- A check on current finance agreements and your liabilities with these agreements
We will then undertake a discussion on the future needs of your business, including:
- Changes of funding methods due to cashflow or tax position
- Lower BIK Taxation for drivers and therefore reducing national insurance contributions
- The vehicles themselves including fuel, insurance, tax, servicing and maintenance costs, image and practicality.
- Do you need to lower the overall cost of the fleet and do you have a budgetary requirement to meet?
All of your specific requirements will be considered, and we will put together informed suggestions to help you decide what is best for you and your business.
To book a consultation, whether you run 3 or 300 vehicles, please use get in touch with us to arrange a no-obligation appointment.
Green Fleet Management
Green Fleet Management
We are fully aware of the commitment you have to reducing your carbon footprint through your fleet of lease vehicles. As a new customer, your fleet will be reviewed and recommendations may be made to help improve your efficiency and ultimately reduce your business costs.
For an obligation free review of your fleet, call us to find out how our experienced team will help enable your business to be miles ahead of your competition.
Contract Hire
Contract Hire
Contract hire is usually the most common form of business vehicle leasing.
The contract is based on lease terms, profile and the annual mileage.
How will you benefit from leasing?
- Leasing frees up working capital
- Fixed monthly costs allow you to budget easily
- Low initial outlay improving cash flow
- No depreciation of vehicle losses
- RFL and servicing, unless otherwise agreed, included
- MOT and Breakdown is covered
- You will gain access to the GKL Fleet Management portal
If VAT Registered:
- Vat payable monthly rather than all together if VAT registered 50% re-claimed on the finance element
- If the car is pure business lease (eg pool car) the VAT is 100% re-claimable
- 100% re-claimable on all commercial vehicles
All that you are responsible for is comprehensive insurance cover, filling up with fuel or charging, ensuring the vehicle stays in good condition and carrying out mileage inputs where advised. Checking and topping up oil and enjoying the benefits of leasing through us.
There are no stings in the tail with off hire agreement costs and damage reports; you will receive very fair damage costs. You also have the ability to purchase the vehicle at the end of the contract should you so wish, or drive away in your renewed lease car.
Fleet First
Whether your business requires 10 to over 100 vehicles, we are more than capable of providing and running your fleet.
You will be able to use the skills of our experienced team and your fleet management portal as additional resources, meaning you can concentrate on your business.
Our team can help your fleet manager greatly improve efficiency and overall savings, whilst keeping maintenance and motor requirements up to date and fully documented.
Finance Lease
Finance Lease
With a finance lease, you choose to pay either the entire cost of the vehicle, including interest charges, over an agreed lease period or opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle.
At the end of the contract, you can continue to operate the vehicle for a nominal fee, but you will at no time take ownership of the asset.
Ownership of the vehicle remains with the leasing company for the duration of the contract, but the car does appear on your balance sheet with the capital element of the outstanding rentals.
Some or all of the rental charge can be offset against taxable profits.
Contract Purchase
Contract Purchase
We agree to sell the vehicle(s) via a series of monthly instalments, covering the cost of the vehicle and an interest element. The monthly fee usually includes a charge for any additional services, such as maintenance. There is usually a final balloon payment, equal to the vehicle’s residual value, after which legal ownership passes to the user.
Having gained legal ownership, the new owner can keep the vehicle, sell it on directly, or sell the car back to the finance company for a price agreed at the start of the contract.
Ownership of the vehicle for tax purposes passes to the user on the day the contract is signed, meaning that the cost can be written down on the balance sheet (by claiming capital allowances).
Hire Purchase
Hire Purchase
This is a method of financing a purchase with the vehicle becoming the property of the lessee at the end of the period. The amount of deposit paid, the period of the contract and the sale price of the vehicle determine the monthly payment.
The loan is secured against the vehicle, which can be repossessed if payments are not kept up.
In the event of the vehicle being sold before the end of the agreement you would still be required to pay the loan back in full, minus an interest credit for early settlement. The vehicle appears on the balance sheet and the purchaser can claim a capital allowance for its depreciation as an asset.
The interest element of the hire purchase fee can be offset against taxable profits.
Purchase and Leaseback
Purchase and Leaseback
In summary, Purchase and Leaseback revolves around us purchasing your vehicle, or fleet of vehicles, and leasing them back to your business on contract hire terms.
1) We purchase your current fleet and lease back to you.
This is a popular solution to fleet management, if you are happy with your current fleet but would like to gain the advantages and benefits of contract hire.
How will you benefit?
- Take advantage of contract hire
- No depreciation losses
- Fixed costs
- No hassle of vehicle disposal
2) We purchase your fleet and dispose of the vehicles, then lease you new vehicles
How will you benefit?
- Hassle free vehicle disposal
- New vehicles with the latest technology
- Modern fuel-efficient vehicles
- Reduced maintenance and general motor costs
- No depreciation costs on leased vehicles
- Put money back into your business fast and free up working capital
- Fixed payment, allowing you to budget efficiently
Employee Car Ownership Scheme
Employee Car Ownership Scheme
The Employee Car Ownership Scheme, or ECOS, allows your fleet manager to retain control of your fleet policy, although the employee “owns” the vehicle.
This means that your employees benefit from vehicle and maintenance repayments that are funded through a combination of tax savings, tax-free business mileage reimbursement and top-up cash allowances. Should the employee leave the company, the value of the car must be reimbursed to you.
ECOS is very flexible as it lets you decide, at the outset, how much you want the employee to contribute towards the overall vehicle costs. This can be done in a variety of ways to suit the business and employee’s needs.
Funding the vehicle generally occurs through the following methods
- The employee contribution (set by the client)
- Utilisation of the tax free mileage allowance (eg 45p/mile to 10,000 miles, then 25p per mile)
- Taxable Top-Up Allowance, should the two previous amounts not be sufficient to cover the costs.
This is not something the client will have to calculate, it can be done on your behalf by your ECOS consultant.
Benefits to you
- Can offer savings to the business per annum per vehicle
- Can be a good employee incentive and retention tool
- Addresses Corporate Manslaughter issues (see below)
Benefits to employee
- Protection from future taxation of cars and fuel increases.
- Allows private fuel to be provided without crippling taxation which negates the benefit.
- Greater flexibility and choice of vehicle.
- Potential to profit at the end of the contract.
- Replicates the peace of mind of the company car.
Corporate Manslaughter
When an employer gives a taxable car allowance as part of the remuneration package, this is generally to allow the employee to purchase their own vehicle to be used for both business and private use.
If the company is not involved in the maintenance and upkeep of the vehicle and it is involved in a fatal accident whilst on business use, then under current legislation, the company would be liable for corporate manslaughter.
The Corporate Manslaughter and Corporate Homicide Act 2007 is a landmark in law. For the first time, companies and organisations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of a duty of care.
The Act, which came into force on 6 April 2008, clarifies the criminal liabilities of companies including large organisations where serious failures in the management of health and safety result in a fatality.
ECOS assists with this issue by ensuring fully maintained, roadworthy vehicles that have the correct insurance.
Greater flexibility and choice
A benchmark car can be allocated for each grade based on each individual employee’s annual mileage, whilst you retain overall control over what car the employee can have.
The company funding is fixed, so if your employee decides to go for a cheaper car then the difference will be added to his take-home pay and is not taxable. Equally, if the employee opts for a more expensive car than the benchmark, the employee meets the additional monthly cost.
The individual can select any car that they can afford from what they are allowed under the scheme, whilst not being restricted in terms of taxation.
Potential for an employee to profit at end of a contract
The Credit Sale Agreement includes an optional final payment, which is an estimate of the market value at the end of the contract. This amount is set out at the start of the contract and will not change.
The employee can decide at the end of the contract if they want to make this payment and retain the car or send it back to the provider.
It might be that the car is worth more than the final payment price and if that is the case, then the employee can purchase the vehicle and sell it on, retaining any profit, tax-free. It could also be purchased to keep as a second car. However, at the end of the lease, whichever option is taken, that vehicle is no longer part of the scheme.
Is ECOS right for my company?
ECOS can be suitable for all businesses, however it may not deliver savings in all circumstances. Before entering into any arrangement the feasibility of this has to be considered on an individual company basis.
It may also be the case that ECOS is implemented to benefit the employee rather than the business.
During your consultation, all the requirements of your business will be considered, and if ECOS is not the answer, there will be some way we can assist you to achieve your goals.