UK plc could save up to £3bn a year by exploiting a
new tax break that has just come into effect and seeks to
encourage firms to switch to greener company cars.
That is the finding of new research undertaken by the Energy
Saving Trust which argues that firms will miss out on millions
of pounds of cost savings if they fail to switch their company
car fleet to vehicles that emit 120 grams of CO2
per kilometre or less.
The report - Behind the Wheel II - claims that under
changes to the tax system designed to encourage adoption of
greener company cars, UK firms could save up to £250m
a year through reduced National Insurance contributions and
£780m from lower fuel bills, by switching to vehicles
such as the Toyota Prius and Honda Civic Hybrid that emit
less than 120 grams of CO2 per kilometre.
Meanwhile, UK employees driving greener company cars would
stand to save £645m through reduced Benefit in Kind
income tax contributions and £1.2bn on the fuel bill
for driving their cars privately.
According to the report, the net result of the changes would
be a reduction in UK carbon emissions of around 4.9m tonnes
The report echoes a similar study late last year from accountants
Grant Thornton, which calculated that, under the new
tax regime, a firm procuring and running a fleet of 50 company
cars could save almost £60,000 over four years by switching
from a mix of the UK's 10 most popular company cars to a fleet
based on an average mix of the 10 greenest cars available.
It found that, while the greener car fleet would cost fractionally
more up front, the extra costs would be more than offset by
reduced tax costs and lower fuel bills.
Nigel Underdown, head of transport advice at the Energy Saving
Trust, said firms could no longer afford to ignore the cost
savings greener fleets would offer. "Running vehicles
costs a lot of money and, with fuel prices over £1 a
litre, it's not going to get cheaper any time soon" -
he said. "In addition, companies in the business-to-business
sector won't get far when tendering for big contracts unless
they can prove their environmental credentials."
However, the Energy Saving Trust report also revealed that
many firms are ill-prepared to take advantage of the potential
cost and commercial benefits associated with running a green
Through a survey of 400 board level executives, it found
that only seven per cent of firms offer employees a financial
reward to choose a smaller or lower carbon vehicle, while
over half of firms that provide company cars do not yet have
a CSR policy in place.