LeasePlan report offers expert guidance on fleet taxation

LeasePlan UK has published ‘The Inside Track: a guide to company car taxation’ in association with Deloitte.

The report by LeasePlan Consultancy Services looks at the real life impact of some of the most recent government announcements relating to company car provision and advises employers how to reduce their company car bill – typically the second biggest employment cost after salary.

As a result of this year’s Budget announcements, an employer running a typical contract-hire fleet of 560 vehicles can expect to pay £102,683 more over the 4-year cycle, according to LeasePlan analysis. The guide provides useful information for businesses on how to select the most appropriate fleet funding option and benefits structure.

Choosing low emissions vehicles is one of the simplest ways to reduce the tax bill associated with a company fleet. From this year, a company leasing a car with emissions above 130g/km only attracts tax relief on 85% of the finance rental cost, compared to 100% for cars below 130g/km. By running a low emissions fleet, a company could save £461 per vehicle over a typical three year term.

Employees can also save money in reduced Benefit in Kind charges by choosing low carbon vehicles. The driver of a typical low-emitting diesel car would be £6,000 better off over a leasing term than the driver of a high-emitting vehicle.

LeasePlan managing director, David Brennan, said: “Anyone involved in the fleet market understands that taxation is a key cost driver. With new provisions announced every year and a complex timeline of when they come into force, we wanted to help our customers understand how their own fleet will be affected. Our experts routinely advise customers how to restructure their fleet for maximum cost efficiency.

"With greater awareness in society of the need to curb pollution and up to three million company cars on the road, the government is using the UK taxation system to incentivise lower-carbon fleets. It will come as no surprise that carbon emissions are a key factor influencing the tax structure, and should be a central consideration for employers when designing company car policies or choosing which vehicles to lease.”