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The impact of a Business Fleet on your Carbon Footprint

carbonfootprint

At present, more than a quarter of the UK’s greenhouse gas emissions come from transport. 

With pressure on the Government to significantly reduce C02 emissions, businesses are considering what role they can play with many turning to fleet vehicles where vast reductions can be achieved quickly and cost-effectively. 

The below addresses some of the questions we are frequently asked regarded the impact of a fleet on an organisation’s carbon footprint.

What is the government approach to company car drivers? 

Government statistics show approximately 800,000 employees driving diesel company cars will in the future pay up to £70m more Benefit-in-Kind Tax (BiK) as a result of an increase in a supplementary charge. 

However, for those opting to drive a modern, clean diesel car that meet new emissions limits, known as Real Driving Emissions Step 2 (RDE2), these additional charges will not apply.

What is a P11D benefit? 

The P11D is a statutory form required by HMRC from UK based employers detailing the cash equivalents of benefits, including the provision of a company car, and expenses that they have provided during the tax year to their employees. 

For fleet managers, P11D is used to determine Class 1A National Insurance Contributions, which is the amount that your company has to pay on the employee benefit provided and an important element of the Whole Life Cost calculation for a car. 

For Company Car Drivers, P11D is used to determine the BiK liability of a vehicle.

How is the P11D benefit impacting individual driver choices in company vehicles? 

Whilst diesel cars are generally thought to have better fuel consumption than petrol models, recent improvements in petrol engine technology and hybrid cars are challenging this because the mileage threshold at which diesel becomes cost effective is higher. 

Plug-in vehicles are also becoming a popular choice for company vehicles, and their popularity will undoubtedly continue to grow.

Will the increased charges imposed by the government lead to more drivers opting out of company car schemes? 

HMRC data proves that rising tax burdens continue to take their toll on demand for company cars. In 2018, the number of UK employees taking a company car fell by 20,000 and this figure continues to decline.

Will we see a return to ‘grey fleets’? 

With the recent growth of company car drivers now taking a cash option and switching to personal contract hire (PCH) as an alternative to traditional company car schemes, they are essentially becoming a grey fleet driver.

What does the future hold for business fleets? 

All indications suggest the popularity of hybrid and electric vehicles will continue to increase in the coming years, with the UK government making a firm commitment to reducing its reliance on fossil fuels, with petrol and diesel vehicles being outlawed from 2040. At the same time pressure also comes from a change in consumer attitude, with eco-friendly practices often becoming conditions of tenders and certainly a prerequisite for any company with serious concern for its reputation. Switching to low-emissions vehicles of course won’t happen overnight, and gradually integrating alternative vehicles into fleets over the next twenty years will be key to a smooth switch-over, which doesn’t incur excessive financial or time costs for fleets. 

To discuss your fleet requirements or to see how we can help you to reduce your fleets carbon footprint please visit https://www.donnellyfleet.co.uk

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28th of May 2019