Fleet News

Drivers urged to rethink free fuel perk

COMPANY car drivers are being forced to think about whether they are going to be better off paying for 'free' private-use fuel rather than pay tax on the fuel scale charge, after Chancellor of the Exchequer Gordon Brown announced annual scale charge increases of 20% in real terms in the 1998 Budget.

As the fuel scale charge escalator increases, industry experts believe company car drivers eligible for 'free' private fuel may be better off opting out of the perk with operators finding a compensation formula that could suit all parties.

Nigel Underdown, director of marketing for fleet leasing and management specialist Godfrey Davis, believes one way of doing this is to reimburse drivers according to manufacturers' fuel economy figures.

He said: 'If drivers are reimbursed according to manufacturer's consumption figures they will be more eager to eke out the economy so they are not out of pocket.'

A driver covering 15,000 business miles a year in a car capable of 30mpg but achieving only 25 mpg could cost himself £386 a year. At the other extreme, a feather-footed driver managing 35mpg could pocket a tax free £274.

As yet only a small number of fleets who deal with Godfrey Davis are turning towards this idea, but the company believe more fleets will consider this when they look at future fuel management issues.

A Godfrey Davis spokesman said: 'These things take time to work through. It is only when drivers are looking at their P46 and see how much they are actually paying in tax do they think 'how can I avoid this?' and start looking at the options available.'

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