Almost one-third of financial directors whose company operates a fleet of more than 500 vehicles are not aware of the impact of CO2 emissions on National Insurance contributions (NICs), according to a new survey.

Lex Autolease, the UK’s biggest contract hire and leasing company, and YouGov surveyed 80 financial directors and found that 29% were missing out on an opportunity to reduce Class 1A NIC. However, just 10% of respondents who manage a fleet of 21-40 vehicles were unaware of the impact of CO2 on NICs.

One explanation might be the fact that financial directors at smaller companies often have a direct control for the running of the fleet, whereas larger companies usually have a fleet manager who oversees key decisions.

However, with fleet purchasing decisions increasingly moving into the boardroom, the survey highlights a clear lack of understanding of the rules surrounding NICs.
Employers can reap significant annual cost savings by making simple adjustments to fleet policy, by introducing a choice of lower emitting vehicles and highlighting the financial savings to the employee of choosing a greener vehicle.

Nigel Stead, managing director of Lex Autolease said: “UK businesses are striving to cut costs, and companies operating fleets of vehicles have a number of opportunities to implement cost saving measures, provided they have the expertise and knowledge to introduce change.”

One-third of those surveyed felt that they could realistically reduce their fleet costs by between 6% and 10% by taking account of CO2 emissions.
With the recent increase in emissions-based taxation, the Consultancy Services team of Lex Autolease has seen a marked increase in the number of UK businesses of all sizes requesting advice and help in implementing and changing fleet policy to deliver cost savings and a greener fleet.

Class 1A NICs are calculated by multiplying the P11d list price of the vehicle by the HMRC benefit in kind tax percentage rates which are derived from the vehicle's CO2 emission levels.

The employer pays NIC on this amount at 12.8%. Vehicles that produce low CO2 emissions, deliver less of a tax burden and hence lower class 1A NIC.