Drivers unaware of CO2 and BIK tax link

Published 29 October 2014

Only half of company car drivers know that CO2 emissions are involved in the calculation of their benefit-in-kind tax bill, according to new research.

Fleet News reports that slightly fewer – 45% – incorrectly thought it was to do with the size of the engine and nearly one-quarter (23%) felt it was to do with the make of the car. One in seven thought it was affected by whether friends and family drove their car.

Only 24% of the 505 company car drivers surveyed for the 2014 Lex Autolease report on company motoring knew exactly how much tax they paid for their vehicle, while 26% said they had “no idea”.

This implies fleet managers need to do more to educate their drivers. But many fleets report a high level of knowledge among their company car drivers.

According to Fleet News, earlier this year, PwC reported its car fleet had an average CO2 emissions of 124g/km, and expected it to be 115g/km by the end of the year.

Tony Leigh, head of car fleet services at PwC, told the trade publication: “It’s self policing because company car drivers understand the BIK savings.”

And Paul Taylor, fleet manager at Morgan Sindall, added: “Our drivers know more about BIK than we do.”

But according to the Lex Autolease report, CO2 emissions were not high on drivers’ lists of priorities when choosing their last company car – although fuel efficiency was important.

When asked to rank the most important factors in choosing a company car, drivers put reliability at the top, followed by fuel efficiency and safety. In contrast, the brand of car was ranked as the least important consideration.     

The report suggests that this lack of apparent environmental concern among company car drivers may reflect uncertainty over what is involved in the calculation of their BIK tax bill and, indeed, how much they pay.

But whatever the attitudes and level of knowledge of company car drivers regarding the relationship between environmental performance and BIK, the fleet manager element of the Lex Autolease research highlighted how seriously green issues are taken by employers.

Almost half (45%) of the 250-plus fleet managers surveyed said they had introduced a more environmentally-focused policy in the past two years and 40% said they would be making further changes in the future.

This reflects the perceived importance of environmental issues; 35% of fleet managers said they were very important, with a further 44% saying they were quite important – three-quarters (73%) thought they had become more important over the past two years.

The sentiment is also reflected in benchmarking data from Lex Autolease’s fleet of 280,000 vehicles, which reveals average CO2 emissions across the fleet have dropped by 11% during the past four years.    

Tim Porter, managing director of Lex Autolease, said: “An increasing number of businesses have realised that implementing a green fleet policy can produce cost savings and environmental benefits.”

Many fleet managers would welcome environmental initiatives on the part of suppliers; 42% found the idea of rentals based on mileage-only attractive, while 12% found the idea of car clubs for employee use in city centres attractive.

Porter said: “I take great confidence from the many successes seen in our industry, most notably in the drive for environmental improvements – a story of aligned interests and actions.

"These include EU regulators setting manufacturers ever-tougher CO2 targets, manufacturers exceeding these targets with innovative and attractive new products, successive UK Governments encouraging greener choices through fiscal policy, organisations working towards their own environmental targets, and individuals recognising the need to reduce their environmental footprint.

“The next challenge is to improve air quality, in our cities in particular, and we hope to see the same teamwork deliver success here too.”

Many suggest that petrol provides a route to improving air quality because, unlike diesel-powered vehicles, petrol variants produce fewer harmful pollutants.

Figures from Lex Autolease suggest that petrol cars are making a comeback within company car fleets after almost doubling their market share in just three years.

In 2011, 8% of new cars coming on to the Lex Autolease fleet were petrol; by 2013 this proportion had risen to 15%.

One reason is that technology has allowed petrol engines to become much more economical, particularly through more efficient turbos. The difference in average CO2 emissions between diesel and petrol cars has also fallen markedly over the past few years.

In 2011, diesel cars produced 16% lower CO2 emissions per kilometre than petrol-fuelled cars on the Lex Autolease fleet. By 2013, this had reduced to 7%.

Many believe that with the increased focus of EU legislators on air quality, the rise of the petrol car is set to continue at the expense of diesel cars.

However, the removal of the 3% BIK differential between petrol and diesel cars may soften the impact.

While electric cars may reach a point in the future where they become a viable choice for fleets, EVs and petrol or diesel electric hybrids currently account for just 2% of all vehicles on the Lex Autolease fleet – a figure that has been static for the past four years.

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