Fleet News

Companies face dilemma over private fuel benefit changes

FLEETS are wrestling with the problem of how to address the cash windfall coming their way and compensate company car drivers as employees give up the benefit of free fuel for private motoring. The move follows swingeing Budget increases, leaving companies facing the prospect of inflation-hiking salary increases in compensation for company car drivers who elect to give up their present free fuel perk.

One leading fleet chief has calculated that a company could save £3 million by 2003 if, as expected, company car drivers decide to pay for private-use fuel out of their own pockets. The Budget's vicious scaled increase in the fuel scale charges - used to calculate how much benefit-in-kind tax a company car driver pays for receiving free fuel for private miles - means that within five years it will no longer be worthwhile for the vast majority of drivers to accept company-provided fuel for personal use.

John Laing Construction fleet manager David Lee, chairman of the Institute of Car Fleet Management's training and education committee has compiled a case study on the issue. 'If the employee continues to accept free fuel, then the cost in tax will progressively rise over the next five years until it amounts to the actual cost of the fuel,' he said. 'What sense will it therefore make for the employer to pay for the fuel as well? In such cases, the fuel will, in effect be paid for twice over.'

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