Fleet News

LPG is ‘still viable’ despite the Budget

LPG is still a viable alternative to petrol or diesel, despite recent controversy surrounding Government funding and fuel duty increases.

That is the message from Vauxhall, one of the country’s biggest suppliers of LPG vehicles, following Chancellor of the Exchequer Gordon Brown’s Budget, which was widely seen to ignore clean fuels.

Although fuel duty on LPG increased above the rate of inflation, the Government did increase a benefit-in-kind tax discount for factory-converted LPG vehicles to 2%.

Combined with the reintroduction of a 3% tax levy for all diesels registered from next year, it means the future is bright for LPG, according to Vauxhall’s LPG consultant Eric Westlake.

He argues that fleet operators will not only benefit from large BIK tax savings and substantially lower fuel bills for their drivers but also from considerable savings in National Insurance Contributions (NIC) based on the tax.

In addition, each LPG powered vehicle sees a £20 saving in Vehicle Excise Duty over an equivalent diesel model and £10 per vehicle over a petrol model from next April.

LPG is typically priced at 39p per litre, compared to 86p per litre for diesel and 82p for unleaded petrol, which can add up to large fuel cost savings for fleets. Westlake claimed that over a three-year/60,000-mile fleet cycle, a Dualfuel Astra 1.4 16v is £850 cheaper to run than a 1.7 CDTi diesel and £1,770 cheaper than the Astra 1.4 16v petrol model.

In addition, from next April, a company can save up to £79 a year per vehicle by running a Dualfuel Astra 1.4 16v compared to a comparable 1.7 CDTi diesel, due to savings in NICs which are charged at 12.8% on employee’s taxable benefits.

Westlake said: ‘For a fleet of 100 vehicles that amounts to a saving of £23,700 over three years, which increases to £29,700 once the saving in Vehicle Excise Duty is taken into account.’

LPG cost savings

Astra hatch Price of fuel Combined mpg Total miles/3 years Fuel cost LPG cost saving
per litre (£) (£)
Club 1.4 16v dualfuel 39p 34.0 60,000 3,222
Club 1.7CDTi (80bhp) 86p 57.6 60,000 4,072 850
Club 1.4 16v 82p 44.8 60,000 4,992 1,770

IC charges

CLUB 1.4 16V DUALFUEL £15,582 135G/KM 13% £445 £259
CLUB 1.7 CDTI (80PS) £14,692 132G/KM 18% £582 £338
CLUB 1.4 16V £13,122 151G/KM 17% £490 £286

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee