ALD Automotive has announced the results of the latest ALD Automotive/YouGov survey of UK Financial Directors running a fleet over 500 company vehicles. The survey reveals that 35% of FD’s are not aware of the impact of CO2 emissions on National Insurance contributions (NIC’s).
In April, 2011 the NIC rate increased from 12.8% to 13.8% meaning that significant cost savings are available to businesses who address the impact of CO2 emissions on their company NI payments. By offering a choice of lower emitting vehicles and highlighting the financial savings to the employee of leasing a greener vehicle businesses can generate substantial savings. Equally of concern is that , only 15% of those surveyed felt that they had any detailed understanding of the costs associated with the running of their company fleet.
With the recent increase in emissions-based taxation, ALD Automotive has seen a marked increase in the numbers of UK businesses of all sizes requesting advice and help in implementing and changing fleet policy to deliver cost savings and a greener fleet.
By choosing a lower emitting vehicle, the Class 1A NIC payable by an employer is significantly reduced. Switching from a petrol version to a diesel version on some models can create a saving of £335. Multiply this figure by a fleet of 500 vehicles and the potential cost saving is £167,500 per annum.
Not only is this an incentive for employers to run lower emitting fleet vehicles, reduce their NIC’s and present a greener image, but the cash savings can also be enjoyed by the employee who will pay less benefit in kind tax (BIK) on his or her company car. This BIK tax is calculated in a similar way, taking the list price and CO2 emissions but then by instead of being multiplied by 12.8% it is multiplied by the employee’s marginal rate of income tax. The higher the CO2 emissions, the greater the taxable amount and consequently BIK tax paid by the employee.