Green Issues
More than half the companies in a recent survey said they had added vehicles with lower CO2 emissions to their fleets over the past year. It was a key action point in their drive to reduce costs.
Likewise, 53% said choosing lower CO2-emitting vehicles would be a major part of their strategy over the coming 12 months.
But going green isn’t all about driving lower CO2 cars. Driving habits are crucial and an increasing number of fleets are training their staff to drive with greater awareness and with less use of an overzealous right foot.
Taxing Numbers
In the biggest change to the tax treatment of cars purchases by businesses (capital allowances) since 2002, from April this year, new vehicles bought or leased by companies are assessed for tax on the basis of the carbon they emit, rather than the purchase price.
Two critical numbers now need to be on every fleet managers radar, 160g/km and 110g/km. Cars emitting more than 160g/km are likely to cost considerably more due to reduced capital allowances while for those which achieve 110g/km or better, 100% written down allowances make these vehicles even better value.
Employees Benefit Too
Company car drivers benefit too, through improved benefit-in-kind tax bills.
Employees who choose vehicles emitting 120g/km or less will pay tax on only 10% of the cars list price (3% for diesels). At the same time, companies save on Class 1A National Insurance contributions that are paid on these benefits.
As an example, compare two cars under contract hire arrangements with a list price of approximately £15,000 - a petrol with emissions of 244g/km and a diesel with emissions of 123g/km. The difference in benefit-in-kind (BIK) for a higher rate taxpayer is £5,100 over a three-year replacement cycle.
Throw into the mix the cost of fuel for 5,000 private miles a year, a large part of which is tax and the difference in cost rises to £6,300.
Simply choosing a car with lower emissions than an equivalent model is not only better for the planet, but it is also lowers the tax cost for the employee and the employer.
