Fleet News

Free fuel perk: the end is nigh

FLEET drivers who receive free fuel for private mileage will become an endangered species over the next year, as a 14% rise in tax on the perk wipes out any benefit for fleet employees. The increase, which is the fourth out of a five-year programme of rises - is less than the full 20% annual increase expected, because fuel prices, on which the increase is based, have fallen compared to this time last year.

However, leading fleet analysts are still urging fleet managers to take a careful look at their drivers' records, as thousands face paying more in tax than the value of the fuel they receive through the perk. The rise takes the 2001/2002 charge on which drivers are taxed if they receive free fuel for private mileage from £1,700 to £1,930 for a petrol vehicle of 1,400cc or less and from £2,170 to £2,460 for diesels under 1,400cc. The tax charge for 1,401cc to 2,000cc vehicles rises to £2,460 from £2,170 for both petrol and diesel vehicles and for over 2,000ccs rises from £3,200 to £3,620.

Fleet managers need to carry out in-depth research on every one of their drivers to see if the perk of free fuel is still more than the tax drivers are paying, especially for those paying 40% tax, as the number of miles driven by each driver differs depending on each vehicle's fuel consumption. For example a driver of a Peugeot 406 2.0-litre 110bhp HDi achieving an average 51.3mpg would need to drive about 8,000 miles to break-even under the new tax if they paid 22% tax or 13,000 miles if they paid 40% tax. Before the tax rises, the same driver would have had to cover 6,000 miles as a 22% taxpayer and 12,000 miles as a 40% taxpayer.

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