Fleet News

Business urged to act over drivers' mileage reimbursement rates

FLEET operators are being urged to consider alternatives to offering staff mileage rates for using their own vehicles on company business, amid claims that some drivers are subsidising their employers.

The official Inland Revenue Authorised Mileage Rates for tax-free reimbursements for employees who use their cars for business have not changed since the 1997/8 tax year, despite rocketing fuel prices, higher maintenance costs and heavy environmental pressure on downsizing.

A review is currently being carried out by the Inland Revenue, which is expected to lead to a new regime using carbon dioxide from the start of the 2001/02 tax year.

The situation for medical staff who use their own cars on business is worse than for ordinary drivers, as many NHS Trusts still use rates that were set in 1993, with staff paid as little as 24.1 pence per mile compared to the IRAMR starting rate of 28ppm.

The Royal College of Nursing, which says 100,000 health staff are left out of pocket by £700 each year because of the low rates, said: 'In the NHS, community staff driving their own cars for work are subsidising their employers - the difference between the car mileage rates they receive and the actual costs are coming out of nurses' pockets. Recent increases in petrol prices have now brought this to a head. The mileage allowances paid are paltry in comparison to current petrol and maintenance prices.'

Graham Bald, exchequer services manager for North West Anglia Health Care Trust, said he was bound by the council rates. 'If the rates were to be increased we would apply them. But we are not in a position to act independently.'

In the March Budget announcements on reform of company car taxation, the Treasury stated that consideration would be given to how the mileage rates 'might be improved, on a revenue neutral basis, to send better environmental signals'. This could mean the new IRAMR will, like Vehicle Excise Duty and benefit in kind company car tax, incorporate cars' CO2 emissions into the formula.

    The Association of British Drivers has launched a campaign to persuade petrol stations to 'show the tax' on fuels. Presently 76p in every £1 spent on fuel goes to the Government in tax.

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