ALD Automotive research: Employers unaware of CO2 emissions impact on NI contributions

Just over one-third (35%) of financial directors are unaware of the impact of carbon dioxide (CO2) emissions on national insurance (NI) contributions, according to research from ALD Automotive.

The ALD Corporate Survey also showed that only 15% of respondents felt they had any detailed understanding of the costs associated with the running of their company fleet.

Following the April 2011 increase in the rate of national insurance (NI) contributions, significant cost savings are available to businesses that address the impact of CO2 emissions on their organisation’s fleet costs. For instance, by choosing a lower emitting vehicle, the Class 1A NI contributions payable by an employer are significantly reduced.

Besides reducing employer NI contributions and presenting a greener image, there are also cash savings available to the employee who will pay less benefit-in-kind tax on their company car.

The benefit-in-kind tax is calculated in a similar way, taking the list price and CO2 emissions, and multiplying these figures by the employee’s marginal rate of income tax.The higher the CO2 emissions, the greater the taxable amount and consequently benefit-in-kind tax paid by the employee.

Keith Allen, UK managing director of ALD Automotive, said: “UK businesses are striving to cut costs, and organisations operating fleets of vehicles have a number of opportunities to implement cost saving measures, whether it is through the introduction of telematics or revised fuel strategies.”

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