Fleet News

Mileage rates shake-up ahead

A RADICAL overhaul of Inland Revenue Authorised Mileage Rates to encourage 'greener' motoring could spark a rush to smaller cars among drivers and create a wholesale review of cash for car and personal leasing schemes.

Inland Revenue changes could turn the current system on its head, either with a single rate based on smaller cars or by paying more to drivers of smaller cars and less to drivers of larger cars.

Any changes could have serious consequences for cash-for-car drivers, whose calculations of whether it is worth opting out of a company car include money from reimbursement for their business mileage.

Mary Braim, policy adviser on transport benefits at the Inland Revenue, and a member of the steering committee on the study, said: 'Depending on the measures we want to get, we are likely to opt for a very simple system. In future a nice way to be able to go would be the use of CO2-based rates.'

The Department of the Environment, Transport and the Regions has commissioned international consultancy MVA in association with the Institute of Employment Studies to evaluate current and future use of the rates. More than 400 fleets throughout the country will be surveyed to assess their approach to repaying staff for business mileage in private cars. It will also assess the scope for changing business travel behaviour through different forms of charges. The study will first aim to provide some exact figures on the use of private cars by company employees and how closely the companies follow the authorised mileage rates.

Martin Dix, project co-ordinator for the MVA, said: 'Anecdotal evidence suggests that high business mileage allowances can encourage some employees to drive further on business, potentially causing more congestion and pollution. We want to explore the effect of hypothetical changes in policy and these will by guided by the initial research we are doing.'

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