New tax rules affecting cars with CO2 output of less than 161g/km can be used to fight back against rising company car costs, says leasing company GE Capital Solutions, Fleet Services.

Increases in new car prices and uncertainty in the used car market are putting upward pressure on company car lease rates. But the removal of the Expensive Car Leasing Disallowance provides an opportunity to offset these and make substantial savings.

From April 1, the current Expensive Car Leasing Disallowance (ECLD), which applies to all cars costing more than £12,000, will be replaced by carbon dioxide based tax relief.

All cars with CO2 emissions of 160g/km and below will be entitled to full tax relief, with vehicles above this threshold attracting a disallowance of 15%.

For a car costing £20,000, GE Fleet Services says that the net after tax cost of leasing reduces by typically £300 per year; and for a car costing £25,000 this rises to £500 per year for cars with CO2 emissions of 160g/km or lower.

Gary Killeen, commercial leader, explained: “There is considerable upward pressure on company car running costs at the moment. Building a car choice policy around the new tax rules is perhaps the biggest single move businesses can make to contain costs.

“By restricting car choice to sub-161g/km, companies will be able to make considerable savings on every vehicle, every year. It is an excellent opportunity to offset increases in lease rates that are inevitably starting to come into effect almost across the board.

“It will also make your business cars cheaper to run through lower fuel costs and also much greener. Drivers also potentially benefit through lower CO2-based benefit in kind taxation. It is a situation in which everyone wins.”

Use new tax rules to reduce business car costs