The Importance of CO2 boundaries

Sub-121g/km

There's a hefty reduction in a driver's benefit-in-kind taxes if they are able to select a vehicle below 121g/km, as it puts them in the 10% banding for petrol cars and 13% for diesels, compared with 15% and 18% for cars between 121-134g/km. The increasing number and quality of cars below 121g/km, including premium brands, has led to many businesses looking to cap emissions for the majority of staff at this level. Salary sacrifice schemes are also at their most effective for lower emission models.

At the time of writing, there were 639 individual models on sale in the UK below 121g/km. When BusinessCar carried out the same research two years ago, the number was 272.

Sub-111g/km

Getting below 111g/km means bigger saving for employers who buy outright, thanks to last year's changes to the capital allowance writing-down regulations. BMW's 320d Efficient Dynamics model is the pioneer at this level, otherwise it's mainly lower medium models or superminis available. When BusinessCar went to press there were 209 individually designated models on offer in the UK at 110g/km or below.

Up to 100g/km

This category is now a hot topic after the London Congestion Charge consultation raised the possibility of sub-101g/km cars getting a 100% discount from the beginning of 2011. At present, the only tax break for being at this level is an exemption from vehicle excise duty that would otherwise cost £20 this year, and will be free from 2011 for cars under 111g/km. But, from April 2012, only cars under 100g/km will qualify for the lowest 10% BIK banding (13% if a diesel unless the rules change), so drivers signing a three- or four-year contract now will by impacted by the change. At present, there are 48 different models on sale at this CO2 level, but that is expected to rapidly rise as the boundary becomes more influential, in the same way as the sub-121g/km point has expanded in recent years.

Article courtesy of www.businesscar.co.uk