Whole Life Costing

What is whole life costing?

As a Fleet Decision Maker you will evaluate a wide range of costs associated with running a vehicle before making a purchasing choice. This analysis is often referred to as a vehicle's Whole Life Costing / Whole Life Cost (WLC). Don’t forget to use our award-winning Whole Life Cost calculator to run calculations of your own.


For a company that operates cars on its fleet, there are many more costs to consider than just the initial purchase price. Throughout a vehicle’s operational life there is a wide range of costs that will be incurred which, in order to make comparisons between vehicles easier to understand, are brought together under one umbrella known as Whole Life Costings (WLC). Using Whole Life Costs as a metric for vehicle comparison is an easy way to bring together all the various headline figures such as MPG, CO2 emissions and servicing costs into one manageable figure.


The factors that need to be taken into consideration for Whole Life Costings are listed below.


  • Purchase price. This is not the manufacturer list price, but the price paid for the vehicle including any discounts.


  • Fuel costs. Total fuel costs over the life of the vehicle. If the car is available for the private use of an employee, then the fuel costs will depend upon whether or not free fuel is supplied for their private use. To calculate fuel costs for your vehicle, use our fuel costs calculator.


  • Service, maintenance and repair (SMR). Projected SMR values for cars are set by data providers to the Automotive industry. These projected costs will take into account the manufacturer’s regular service schedules, together with an allowance for tyre replacement, based on how long and over what distance the car will be operated.


  • Vehicle Excise Duty (VED), commonly known as road tax. The first year’s tax is included within the purchase price, but the standard rate of VED will have to be paid in subsequent years. The amount to pay is determined by the car’s CO2 emissions, which determines the cars VED bands. All cars with emissions under 130g/km are free of VED for the first year.


  • Finance costs. If the car is paid for in full upfront, then there won’t be any finance costs. Otherwise, these will be based on the purchase price and the rate of interest charged.


  • Insurance. Whether the vehicles in question are insured on an individual model basis or on a Fleet policy, insurance is an important cost to recognise within the Whole Life Cost.


  • Residual or Resale value. The proceeds from the sale of the car, subtracted from the purchase price. The difference between the two is known as depreciation. Estimated residual values are set by data providers to the Automotive industry.


  • Registration Fee. When a vehicle is first registered and taxed, a fee must be paid to the DVLA. This is currently charged at £55 for all cars.

Other costs and revenues that may need to be considered when calculating Whole Life Costing:

  • Class 1A National Insurance Contributions (NICs). This is an important element when looking at the tax owed on a company car. If the car is made available to the employee for their private use, this is deemed to be the provision of a benefit and the employer will have to pay Class 1A NICs on the value of this benefit. Similarly, Class 1A NICs are payable if free fuel is provided for the employee’s private use.


  • Plug-in Car Grant. The Government Plug-in Car Grant is designed to help make the whole life costs of a qualifying car more comparable with petrol or diesel equivalents. From 1 March 2016, qualifying vehicles are assigned to one of three categories, based on a combination of CO2 emissions (maximum 75g/km) and range in zero-emissions mode. The maximum grant available for vehicles with CO2 emissions below 50g/km is £4,500 (£2,500 if range in zero emissions mode is under 70 miles), reducing to £2,500 for CO2 emissions of 50-75g/km. Please visit for confirmation of vehicle eligibility.


Analysing all these costs together will give you an informed view of the real costs of buying and operating different cars. Visit the Whole Life Cost calculator found in the Toolbox to compare the Whole Life Costs of different vehicles using independent data supplied by CAP*.


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