Understanding the impact of clean air zones for businesses

The introduction of clean air zones to cities around the UK is another expense that will soon eat into organisations’ profit margins. Here’s our guide to managing this cost before it becomes another red line on your company’s EBIT(D)A.

WHAT ARE CLEAN AIR ZONES AND WHERE WILL THEY BE LOCATED?

The government’s Clean Air Strategy reports that dirty air is the biggest environmental health risk in the UK. And vehicles are one of the biggest contributors to emissions. This resulted in the Supreme Court issuing an order to cut air pollution in 2015. In response, a number of UK cities are introducing clean air zones to tackle emissions and improve the quality of our air.

London was the first city to do this with its recent introduction of an ultra low emission zone (ULEZ) in the heart of the capital. Any vehicle that fails to meet the ULEZ emission standards will be charged £12.50 per day when entering the zone. You can check to see if your car will be charged by visiting the website, however, exempt cars will likely include:

• Petrol cars that meet the ULEZ standards are generally those first registered with the DVLA after 2005; however, some cars that meet the standards have been available since 2001
• Diesel cars that meet the standards are generally those first registered with the DVLA after September 2015

Unless your employees intend to drive in a tiny section of London (or Glasgow where a low emission zone has been in place since December 2018), this might not seem like a major issue for your business. However, London’s ULEZ will expand to cover a much larger area of as of October 2021. And the following UK cities are also in the process of introducing similar charges and zones:

This list of cities is set to get much longer as, according to the BBC, recent court cases have resulted in the government: “telling 28 more councils to draw up plans to tackle nitrous oxide levels and a further 33 to carry out feasibility studies on whether a clean air zone was needed to reduce levels in the shortest possible time.”

At the time of writing in June 2019, many of the cities on the above list are focussed on charging larger vehicles like buses, coaches and HGVs. However, two of the front runners have had their plans signed off by government:

• Leeds – the clean air zone will cover most of the city centre and will mean:
  • no charges for private cars, vans, motorcycles and mopeds
  • £12.50 for taxis (or £50 per week for Leeds-licensed vehicles)
  • £50 for buses, coaches and HGVs
• Birmingham – will have a clean air zone effective from 1st January 2020 on or inside the inner ring road and vehicles will be charged as follows:
  • £8 for private cars and taxis
  • £50 for buses, coaches and HGVs
  • motorcycles and mopeds are expected to be exempt

Depending where your staff travel for business, this could soon add up.

HOW WILL THEY IMPACT PEOPLE DRIVING ON BUSINESS?

There are two major costs associated with these clean air zones: time and money. Obviously, staff will need to claim back any charges which can be claimed using your company’s usual expenses procedure. But this also costs time for those claiming and those processing expenses.

HOW CAN YOUR BUSINESS CONTROL COSTS?

One way to avoid clean air zones is to avoid driving in city centers, so you could ask employees to plan their journeys carefully to avoid charges. Many urban centers offer park and ride facilities with free parking. While there will be an additional cost in terms of public transport, it’s likely to cost less than the clean air zone fees.

Alternatively, you could encourage employees to take public transport to meetings. However, if cost if your primary driver, this is unlikely to save your business any money: petrol for a journey from Manchester to Birmingham costs around £9 whereas a train ticket costs around £90. Which means looking for a better alternative in the form of low emission cars.
The main aim of the clean air zones is to encourage drivers to take up newer, less polluting cars. If your company runs a fleet or provides company cars, a range of greener vehicles will not only reduce clean air zone charges but will be far more tax efficient both now and in the future once the new car tax regime is introduced in 2020-2021. Making green cars the smart choice for the health of the nation and your company’s and employee’s finances.