Adjust fleet policy now to avoid costly carbon threshold changes, says Fleet Alliance
That’s the view of leasing and fleet management specialist, Fleet Alliance, speaking ahead of the new rules governing capital allowances that come into force from the beginning of April this year.
From April, the threshold for the main rate of capital allowances for business cars reduces from 160g/km to 130g/km, as does the limit to which the lease rental restriction applies. For cars with emissions below 130g/km companies can still offset 100% of the lease rental against corporation tax, but for those over 130g/km the amount is restricted by 15% to 85%.
Since the 160g/km carbon dioxide emissions threshold was introduced in April 2009, many companies have used it to set their maximum carbon threshold in order to maximise the tax benefits. However, following the announcement of the new regulations in last year’s Budget, Fleet Alliance has been advising its clients of the importance of re-setting the carbon ceiling within their fleet policies.
‘The impact of the new rules will, we calculate, add around £10 per month to the lease rental for the average fleet car. But companies can avoid the impact of this rise if they introduce a new fleet policy with a sub-130g/km carbon ceiling ahead of the April deadline,’ said Fleet Alliance managing director, Martin Brown.
‘On a fleet of say 250 cars, a £10 per month increase on a 36 month contract adds up to an additional £72,000, so it’s clear that there are genuine cost advantages in re-setting your carbon ceiling to sub-130g/km,’ he said.
Brown added: ‘We have been advising clients to order cars with CO2 levels as low as possible for some time, as well as looking at the introducing a special “green” variant for each grade of the car policy, such as hybrids or low carbon models.
‘By making the right vehicle choices now, fleet decision-makers can make cost- savings running into several thousand pounds over the typical three-year life of a vehicle,’ he said.
- Fleet operators can use the CO2 & Fuel Consumption webtool on the Fleet World Group website to find the lowest-emitting vehicles suitable for their fleet. For more details, visit the website at fleetworld.co.uk