ALD Automotive/YouGov research: Financial directors unsure of fleet ownership costs

More than a third of UK financial directors are unsure of how to calculate the total cost of ownership of their business cars, according to new research by ALD Automotive and YouGov.

The ALD corporate survey revealed that 35% of financial directors are unsure of how to make this calculation, and that only 15% of respondents felt they had any detailed understanding of the costs associated with running the company fleet.

Total cost of ownership (TCO) is calculated by adding VAT, national insurance (NI) and fuel costs to the monthly lease price of the company car.

Furthermore, only 58% of businesses questioned in the research said they had the most cost-effective fleet strategy currently in place; while 41% of UK businesses are failing to address the impact of NI contributions on the cost of managing their fleet.

Keith Allen, managing director of ALD Automotive, said: “Organisations need to understand how TCO is calculated, otherwise there is a danger that if the warnings are unheeded, then businesses will suffer as a result of the tax changes relating to company cars next year.”

From April 2012, the emissions threshold will be reduced, meaning that the new 10% low rate band for company cars will start at 99g per km as opposed to the current 120g per km. Company car tax will increase by 1% for each 5g per km rise in CO2 above 99g per km.

The new charge for 120g per km emission company cars moves from the current 10% level to 15% in 2012/13. The key impact for employers is the effect on national insurance contributions, which is based around the taxable list price and CO2 emission of the company car, which contributes to the overall TCO figure.

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