CO₂ For Business

Why is CO₂ important to fleets and drivers?

CO₂ Implications to consider:

  • Class 1A National Insurance ( 13.8%) paid by employers and linked to CO₂ of the car and also chargeable on any private fuel benefit provided.
  • Lower CO₂ can often mean better fuel economy and be linked to other fuel saving Drive-e technologies, such as Start/Stop function.
  • Government Plug-in grant recently announced an extension to 2018 and new tiered structure from March 1 2016.
    • Category 1 – CO₂ emissions of less than 50g/km and a zero emission range of at least 70 miles and no price cap - £4500 grant.
    • Category 2 – CO₂ emissions of less than 50g/km and a zero emission range of between 10 and 69 miles and price cap of £60,000 list price - £2500 grant.
    • Category 3 - CO₂ emissions of 50g/km to 75g/km and a zero emission range of at least 20 miles and price cap of £60,000 list price - £2500 grant.
    • £500 towards installing an electric home charge point.


Company Tax Allowances, such as Capital Allowances and Lease Rental Restriction are linked to CO₂:

  • Capital allowances, which affects the rate at which companies can write down the cost of buying cars against taxable profits from tax year 2015/2016.
    • Sub 75g/km – 100% write down in year 1
    • 76-130g/km – 18% each year on a reducing balance basis
    • Above 130g/km – 8% each year on a reducing balance basis
  • Lease rental restriction, the amount of the lease rental payments claimable against corporation tax
    • Under 130g/km fully deductible against taxable profits
    • Above 130g/km 85% deductible against taxable profits

Driver Benefit in Kind is a tax payable on a perk such as a company car that is also available for personal use. To calculate the cost to a driver either visit our comparison tool for the figures for this tax year and the next two, or follow this calculation:
P11D price of car (price list)
x CO₂% (found on HMRC tax table or price list)
x Your tax payer band (20%/40%/50%)
= Annual cost deducted from salary (divide by 12 for monthly cost)

Private Fuel benefit is when you receive free fuel from your employer covering private use and is subject a similar benefit in kind calculation:
£22,100 (set by HMRC for tax year 2015/2016)
x CO₂% (found on HMRC tax table or price list)
x Your tax payer band (20%/40%/50%)
= Annual cost deducted from salary (divide by 12 for monthly cost)

Download the 2015/2016 Tax Guide

Visit our comparison tool to see information on the chosen models including, BIK for current and coming tax years, National Insurance, SMR, pence per mile and full specification comparisons. There is also useful information for fleet decision makers on topics including good fuel management and journey planning in our Fleet Factsheets section.