New tax breaks introduced this week could mean savings of almost £3 billion a year if UK businesses all switch to low emission company cars.

Research has found that if firms all chose vehicles emitting less than 120g/km of CO2, there could be:

• £250m saved through reduced National Insurance Contributions;
• £645m saved through reduced Benefit in Kind tax contributions;
• and £780m saved through reduced fuel consumption.

 

Additionally, privately driven company cars could see fuel bills drop by £1.2 billion.

Such measures would mean emissions from UK company cars used on business drop by 1.9m tonnes and 3m tonnes when driven privately.

The findings form part of a new report from the Energy Saving Trust (EST) which follows a survey of 400 board-level executives at UK organisations.

The study found only 7% of companies offer a financial reward to employees to choose a smaller, cheaper or lower carbon vehicle.

More than half of firms that provide cars – 51% – do not have a corporate social responsibility (CSR) or environmental policy.

Of those that do, only a third consider the environmental impact of the vehicles they provide.

EST head of transport advice Nigel Underdown said fleets should act now.

“The reasons are there for all to see: 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.

“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.”

Mr Underdown said the new tax breaks could mean someone driving an average company car could halve their tax burden should they switch to a low emitting vehicle.

“I predict that 2008 will see a tipping point where offering and choosing low-emitting cars is the only sensible business option,” he said.

”Implementing a green fleet policy could save an organisation with 50 cars up to £45,000 every year.”

A list of all the cars emitting 120g/km of CO2 or less, plus a guide to the new tax laws is available on this site - just write 120g/km in the search box.

OTHER FINDINGS
• A third of companies (32%) offer a cash alternative to a company car.
• 73% of organisations restrict the type of vehicle that employees can use for work.
• Managing directors are responsible for company car policy in 46% of companies surveyed.
• 55% of respondents were encouraged by their companies to try to reduce their carbon emissions from business travel.
• Discouraging unnecessary meetings is the most common way of cutting carbon emissions.
• 28% of companies still think it would cost money to cut carbon emissions.