KPMG says that over 1,700 London-New York flights’ worth of CO2 could be saved if employees switched back to company cars.

The UK could save annual CO2 emissions equivalent of just over 1,700 Boeing 747/8 flights from London to New York - if all employees who have opted out of company car schemes chose to take advantage of ‘green’ tax breaks and opt back into their employer’s schemes.

According to KPMG’s Company Car team, since 1999 there has been a decline in the number of company cars, with HMRC figures indicating 400,000 employees having opted out in preference of purchasing their own vehicles. KPMG research** suggests that 52 per cent of employees who opt for cash instead of a company car use the money to purchase a second hand car, with emissions estimated at 30-40 plus grams per kilometre higher than the average company car driven by their colleagues.

If all 400,000 employees that have opted out opted back in, assuming they currently emit the national private car average of 191g/km**, driving a typical distance of 18,000** miles per annum and they drop to the average company car with emissions of 165g** on the same mileage the UK would save total annual CO2 emissions of 301,000 metric tonnes the equivalent to just over 1,700 Boeing 747/8 flights from London to New York.

Harvey Perkins, director within KPMG’s Company Car team commented:

“Changes made by the Government in 2002 to the company car tax rules were received with mixed reviews. For a minority driving relatively low business mileages in relatively high emissions vehicles, the changes had a negative financial impact and a number of people chose to opt out of the company car regime and buy their own cars instead. However, there is no doubt that the effect of the Government’s foresighted approach to use these rules to help employees make the right environmental choices has been to drive down CO2 emissions in company cars.

“Recently we have been seeing a change in mood with the number of company cars beginning to grow again. This seems to be driven by employees being more aware of the advantages of company cars both to the environment, and by extension their own pockets and, to some extent, employers’ concerns over the potential health and safety implications of their staff using privately owned vehicles for work purposes.”

A move towards consumers demanding greener vehicles is forecast to continue according to the 2008 annual global automotive survey by KPMG LLP in which senior global auto executives reported increased demand for vehicles using alternative fuel sources: 65 percent of respondents said this was important or extremely important to consumers, a significant increase on 53 percent in 2007.

Further changes to company car tax rules will come into force from April this year, and will allow for a much lower tax and national insurance charge in respect of vehicles that emit 120 grams of CO2 per kilometre or less. These ultra low emission vehicles allow employees to benefit from the lowest tax charges on company cars in a generation.

According to Harvey Perkins employers are looking to respond by improving their company car options. He said:

“Employers are keen to ensure their schemes offer employees the best options by featuring cars in the lowest emissions bracket. As manufacturers continue to strive towards delivering viable environmentally friendly alternatives, the financial and environmental benefits could be significant.”