Small to medium-sized companies have poor perception of environmentally-friendly vehicles

The study, carried out by chartered accountants HLB Kidsons, a firm which specialises in SMEs, was designed to find out how new company car tax changes due to be brought in at the beginning of the new tax year in April 2002 will affect the makeup of company fleets. Tax charges on company cars will be based on a percentage of the car’s list price and graduated according to the vehicle’s carbon dioxide emissions. Some of the reasons that respondents to the survey gave for their lack of interest in more environmentally sustainable vehicles included:

• the perception of prohibitive costs;
• a lack of enthusiasm for such vehicles from employees; and
• their impracticality due to problems with re-fuelling.

“Although the Government’s policies to encourage drivers to choose smaller, more fuel-efficient cars appear to be working, especially amongst larger companies, environmentally friendly vehicles are still not perceived as a viable or attractive alternative,” said Richard Baron, Deputy Head of the Policy Unit at the Institute of Directors.

The new tax regulations were announced in the Chancellor’s pre-budget report last November, an Institute of Directors spokesman told edie. The changes that are of particular concern are those relating to car and fuel benefits in kind (BIK), which nearly half of the companies surveyed said will have a big impact on the operation of their fleet. Nearly one in five firms said that they expect to reduce the size of their fleet, often with employees being given cash alternatives and being asked to provide their own vehicle. The provision of more sustainable vehicles – the outcome that the Government had intended with the new tax rules – is not seen as an option.

“Motor manufacturers should lead the way and make the investment to develop environmentally friendly cars and, while there is a movement in this direction, at the moment they are doing little to encourage the use of such vehicles,” said Rob Thompson, Senior Tax Manager for HLB Kidsons’ motor group.

“For many SMEs the proposed programme of graduated tax changes that will aim to ‘tighten up’ on the CO2 emissions of company cars will mean extra red tape along with the cost of replacing cars on a regular basis,” added Baron. “Many SMEs believe that improving public transport and its infrastructure would be a more effective way to create an environmentally friendly society.”