October 16, 2014

The benefits behind running a green fleet

How going green can cut your fleet costs – and your carbon footprint

When it comes to company cars, running a green fleet isn’t just about meeting your corporate social responsibility (CSR), although the two are most definitely linked. But increasingly it’s about making the best, most cost-effective financial decisions for your company vehicles.

Why should you consider running as green a fleet as possible?

Due to various legislative changes linked to carbon dioxide emissions, going green now has serious fiscal benefits for your business.

Over time, various taxes relating to company cars, including Benefit-in-Kind (BIK), Capital Allowances, National Insurance Contributions (NIC) and Vehicle Excise Duty (VED), have been linked by Government to the carbon dioxide emissions.

This link is only going to get stronger over time as forthcoming tax years will see tax charges rise for less environmentally friendly vehicles.

At the moment, a key benchmark is the 130g/km threshold for Capital Allowances. But taxation thresholds are reducing all the time and the bar is being set lower with each financial year.

Planning to have a green fleet by only selecting cars of less than 130g/km is a good move, but setting the target at 120g/km or lower and working towards that would be better still – and ultimately more financially rewarding.

Benefit-in-Kind tax is ‘most important’, say drivers

A survey of over 1,000 drivers found that BIK tax was their key concern and the most influential factor they considered when choosing a company car. That only serves to underline the fact that setting a green fleet policy is important from a company and a driver perspective.

This year’s Budget in March announced significant changes to BIK tax, with increases of 2% for cars emitting more than 75g/km of carbon dioxide for the next four years from 2015/16 to 2018/19.

And that’s on top of the 1% rise that came into effect in April, a move which clearly signposts the way that Government is thinking.

These changes merely serve to underline the importance of setting a green fleet policy that encourages the take-up of low-emitting cars to capitalise on lower BIK tax, reduced NIC and VED and better fuel costs.

Manufacturers leading the way

The major motor manufacturers are leading the way in the green fleet stakes and they are setting their own bars lower, too.

Modern technologies are now moving so fast that many new models are automatically taking drivers into lower carbon vehicles. And new developments, such as petrol-electric and diesel-electric hybrids, are also available to help cut overall emissions and are increasing in numbers in the fleet market. There are now more than 1,000 available models with carbon emissions of less than 120g/km and that number is rising all the time.
BMW i3 green fleet

And it’s not just small cars or some of the more obscure makes. BMW now has Efficient Dynamics models that emit 109g/km or less, while Volkswagen, Audi, Ford, Vauxhall, Peugeot and a host of other mainstream makes, all have models that can equal or better this standard.

At the same time, BMW has recently launched the all-electric i3, a car that is starting to make inroads in the fleet market. This latest model joins all-electric offerings from companies like Nissan, Mitsubishi, Peugeot, Vauxhall and Volkswagen.

So there is really no excuse for NOT looking at less polluting cars when setting a green fleet policy.

Seek independent advice

What does require some thought and planning is how you fit these low carbon-emitting vehicles into your green fleet policy, as well as looking at the potential for the inclusion of special ‘green’ variants, such as hybrid or electric vehicles.

Company car drivers are typically the first to take action and react to changes in legislation, as well as adopting new models and technology from manufacturers, especially when it saves them and their company money. But there are very real financial and environmental benefits for all companies in planning their green fleet policy over the next three or four years to maximise their carbon efficiency.

However, it is not merely a question of moving as many vehicles as possible towards the 130g/km mark and hoping for the best. You should always seek independent, impartial advice in helping you devise the most tax and cost efficient green fleet policy to suit your company’s needs.

An independent advisor has no allegiance to any specific car makers and should be able to give an unbiased, impartial view of which models would suit the requirements of your particular fleet policy.

Not only that, they should be able to help you draw up a green fleet policy that takes into account all the legislative changes and maximises the financial rewards you can achieve, while still meeting the aspirations of your drivers. That’s a fine balancing act that definitely requires expert advice.