The Cost Of Company Cars Under New Legislation

Ouch! Have You Seen The Cost Of Company Cars Under New Legislation

Businesses that own a fleet of cars face additional running costs under new legislation imposed on motorists throughout the UK and Europe. As a result, the business of car leasing is set to undergo some major changes.

In attempts to reduce carbon and nitrogen oxide emissions, car owners face higher taxes and penalties unless they upgrade their car.

The new tax bands introduced in April 2018 and the ‘toxicity charges’ that will be enforced in 2020 will mean businesses that own a fleet of cars will face significantly higher running costs.

And the running costs will be £1000’s!


New EU Car Emissions

According to the European Commission, cars are responsible for pumping around 12% of carbon dioxide into the atmosphere. In a bid to tackle pollution, EU legislations order car fleets to be more environmentally-friendly.

Under the so-called Toxicity Charge or T-charges for short, motorists are obligated to upgrade their cars to meet with the latest emission efficient standards.


Emission Penalties

Drivers of older vehicles that are deemed to be polluting the air with poisonous nitrogen oxide will be fined £10 a day.

The Conservative London Assembly Member estimates that 9000 car owners will be charged a combined total of £23m.

Furthermore, a growing number of councils across the UK are introducing fines for petrol and diesel cars that use ultra-low emission streets between certain times.

Furthermore, on-the-spot fines of £20 will be handed out to drivers that keep the engine running whilst waiting.

The initiatives are intended to promote more people to buy hybrid and electric-only vehicles in order to help the government meets its target of lowering the number of petrol and diesel cars to below 50% by 2040.


Increase in Car Tax

Authorities heightened the pressure on UK businesses to invest in low-emission vehicles in April 2018. New tax rates on cars will mean some cars will incur a small increase in Vehicle Excise Duty (VED) but for new diesel cars being registered there are increases of up to £560!  

Low emission cars 0 – 100 g/km will pay between £0 and £145 a year. For higher emitting cars these rates can increase to £2070 in year 1 with a standard rate of £450 in years 2 – 4.

Not only that, but a “first year” VED road tax rate makes owning a car in bands E-M even more expensive in the first 12 months.

Taxes in the first year incur costs of £130 (band E) up to £1,120 (band M). Low emission cars in bands A-D on the other hand do not pay road tax. Check the cost of your car in the table below:



Government Drive To Remove Petrol and Diesel Cars

As part of its “Road to Zero” plan, UK policymakers are clamping down on petrol and diesel cars – to such an extent that older cars could be banned from the road entirely.

In radical proposals commissioned by the EU to fight air pollution, diesel cars have been placed into a new system that tests energy efficiency and the quantity of emissions.

Plans to remove older cars from the road were initially introduced by under EU legislation, but the conditions are likely to remain in the UK after Brexit.

The government has promised that at least 50% of new cars on UK roads will be low-emission hybrids or fully electric by 2030.

By 2050, the only cars permitted on the roads will be zero-emission vehicles.

Businesses that have been wrestling with the decision of whether to buy or lease a fleet of cars should be able to reach a decision much more easily now. The lawmakers have made the decision for you!

The crux of the matter is that business owners need to find a better way of managing their fleet of cars in order to reduce overall costs.


For more information, we’ve put together a FREE GUIDE which covers everything you need to know about calculating the cost of buying or leasing a fleet of cars.

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