Environmental guidance for your business in Northern Ireland & Scotland

Vehicle tax and fuel duty

Vehicle tax and fuel duty

Using company cars for your business can be an expensive undertaking. However, there are ways in which you can reduce this burden by opting for greener ways of running your cars and the way you use them.

Vehicle excise duty (VED) and the company car tax system are now based on the amount of carbon dioxide emissions a car produces, not its engine size, as was the case previously. The lower the emissions, the less tax you will pay.

You could also claim up to 100 per cent first-year allowances on the expenditure on a new car, depending on its emissions.

GOV.UK: Fuel consumption and emissions for cars

Biofuel alternatives

Switching your current cars to run on liquefied petroleum gas (LPG), bioethanol or biodiesel could almost halve the rate of fuel duty you pay.

GOV.UK: Fuel duty rates

Cars using LPG and biofuels are less fuel efficient than petrol-consuming cars, but the reduced cost of fuel and reduction in emissions are worth considering. However, the overall environmental benefits of biofuels are a matter of debate as a lot of energy is needed to grow and transport the biofuel crops.

Reducing vehicle use

While there is currently only a congestion charge for driving into central London, other local authorities are looking into its potential to reduce congestion. There is also research being conducted into the viability of road pricing on a national scale. You might want to audit your use of company vehicles, noting how often they are used, at what times and whether they are used to drive into towns and cities.

Minimising the use of company cars where possible will not only improve the environment but could also save your business money. For example, you could replace face-to-face meetings with telephone calls, online discussions or video conferencing, and try to use public transport where possible.

In this Guideline

Climate change levy

Climate change agreements

Enhanced capital allowances

Landfill tax

Vehicle tax and fuel duty

Aggregates levy

Tax relief for restoring contaminated or derelict land

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