An employee has left. What happens to their company car lease?

When a driver leaves, the company is still tied to the lease. Here are your options: reassign it, end it early, or transfer it to another business.

When someone with a company car hands in their notice, the car usually comes back to the business, but the lease doesn't end with their contract. The company is still committed to every remaining monthly rental. That's when fleet managers and finance directors start looking at the options.

Option 1: give the car to another employee

If someone else needs a car, reassigning it is often the simplest answer. Check that the car suits the new driver's mileage, that your insurance covers them, and update your P11D and company car tax reporting for the new driver.

Option 2: end the lease early

Every business contract hire agreement has an early termination clause. The charge varies by funder. A common approach is around half of the rentals still to pay, and some funders also charge the full rental for the month the car goes back. Excess mileage and damage are invoiced on top. Our guide to the Early Termination Charge works through an example.

Option 3: transfer the lease to another business

Many funders will transfer (novate) a business lease to another company that passes their credit checks. The new business takes over the remaining rentals and the car, and your company's liability ends when the funder completes the paperwork. You pay the funder's transfer fee instead of a termination charge.

On Swap-a-Lease you list the car once for £39.99. A success fee is only due if the transfer completes: two months' rental if 12 or more months are left, or one month's if fewer. You can compare the two routes in our guide to lease transfer or Early Termination Charge.

Before you decide

• Read the agreement. Find the funder's name and the early termination clause.
• Ask the funder two questions in writing: what would it cost to end the lease today, and will you allow a transfer to another business?
• Check the car's mileage and condition, because either route will settle these at handover.
• Don't stop paying. Until the termination or transfer completes, the rentals remain your company's responsibility.

Next step

Check what your funder says about transfers in our Funder Fees table, then list the lease to see if a business wants to take it over. If the leaver's car is one of several you need to deal with, contact us and we'll help you work through them.