Fleet News

Drivers facing free fuel tax nightmare

COMPANY car drivers face rocketing tax bills next year because hundreds of employers are refusing to give them the choice of opting-out of receiving free fuel for private mileage, even if they are being taxed more than the benefit is worth.

A new survey by ARVAL PHH revealed that 67 per cent of fleets providing the benefit give their drivers no choice in accepting or declining free private fuel.

The study of 300 fleet decision-makers also found that only 13 per cent of the fleets changed their fuel policy over the past 12 months with regard to free private fuel, while only 26 per cent are planning any changes over the next year. This is despite the Government's continuing campaign to increase the tax charge on receiving free fuel for private mileage by 20 per cent above inflation each year.

The tax increases have meant many drivers are paying more in tax than the benefit of the fuel they receive, and employers are spending thousands of pounds providing a perk that is often worthless.

Employers are also seeing rocketing tax charges, because they pay National Insurance Contributions on the driver's benefits. Last year, Class 1 NIC costs for employers went up an estimated £15 million because of increases in the fuel scale charge.

The survey also revealed that a third of fleets did not provide drivers with access to a tax calculator to give them an idea of whether they were better or worse off receiving free fuel for private mileage.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee