Jumping on the LPG bandwagon

The question is, how does all this leave the company car driver. What for so long was considered a perk of the job is, for many, slowly turning into a burden.

Recent tax changes mean you could pay up to 35% of the list price of your company vehicle in tax and with the payment based on CO2 emissions, the days of luxury petrol-hungry cars for management seem to be numbered. It’s enough to wipe the smiles off both Papa and Nicole’s faces.

Vehicles with a CO2 emission of 165g/km are subject to a 15% tax with each 5g/km rise, the tax rises by 1%. Diesels carry a 3% levy on top of these rates. Multiply the car’s list price by the percentage tax and multiply that figure by the employees income tax level and the resultant figure is the tax due.

While the fastest-growing sector within the fleet finance market is the structured ECO schemes – where drivers technically own their cars and avoid paying tax – many are simply offering employees cash alternatives.

Pressure on business to protect the environment is also weighing heavily on the shoulders of fleet managers – but here there is some good news. UK tax breaks have made liquid petroleum gas a cost-effective and green solution.

If the only fuel used by the car is LPG, there is a discount of 1% plus a further 1% for every 20 g/km the car’s CO2 emission level is below that year’s threshold. For hybrid cars (petrol/electric) there is a discount of 2% plus 1% for every 20g/km the CO2 emission level is below the threshold for that year.

Furthermore, as LPG is half the cost of conventional petrol or diesel, the emissions are less harmful and just about any normal car can be converted to run on gas – the conversion is quick and costs roughly £1,400.

Globally, many are reaping the benefits of the new fuel. Italy currently has over one million LPG vehicles on the road. In the Netherlands, North America and Mexico there are around half a million in each country and growing. Japan is currently the world’s greatest consumer of LPG with more than 1,800,000 tonnes a year – the new fuel powers over 90% of all taxis in Japan.

In Britain the number is only at 50,000 and there are currently about 1,100 LPG sites in UK forecourts.

To boost the LPG cause, the government is lending a helping hand to motorists with the cost of converting to gas. Grants of up to 70% of the cost of engine modification are available under the Powershift initiative.

So far, LPG has been largely restricted to big companies that have their own central refuelling depots for their fleet vehicles. That is likely to change soon as the savings can be astronomical.

While tax on petrol increases yearly, LPG duty has fallen 73% in the past seven years and the Treasury has pledged a three-year tax freeze on gas. Companies can save up to 40% on running costs by using LPG.

On a typical dual-fuel vehicle doing 25,000 miles, that works out to be an annual saving of about £1,400. And the introduction of congestion charging in London provides further incentive to adopt gas-powered vehicles given the charge-exempt status of the cleanest versions.

Lately, motor manufacturers have been won over by the LPG argument. Vauxhall, Volvo and Ford either already produce or are planning factory-ready dual-fuel models.

The clean vehicles’ market is on target for a long-awaited boom and sales are expected to hit £1bn this year. The Queen has also given the royal seal of approval to clean vehicles with her fleet of Rolls Royces running on LPG, and many ambulances, police vehicles and buses are switching. Other well-known clean vehicles companies include DHL and the AA.

Even deputy prime minister John Prescott now drives a specially converted Jaguar Sovereign and he announced early this year that it will become policy for all ministerial cars to be able to run on liquid petroleum gas in addition to petrol.

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