Fleet News

Tax plan flies in face of enviro aspirations

THE Government's determination to wipe out the benefit of free fuel for private mileage flies in the face of the drive to encourage cleaner cars and the use of alternative fuels. As part of a five-year programme of tax rises aimed at discouraging drivers from opting for the 'perk', Chancellor of the Exchequer Gordon Brown has decided that it should cover all fuels, including 'green fuels' such as liquefied petroleum gas.

However, because liquefied petroleum gas costs about 40 pence per litre (£1.81 per gallon), about half the price of petrol, a motorist would have to drive twice as far to justify receiving the 'perk'. Therefore, if the driver is determined to continue receiving free fuel, it would be almost impossible to persuade them to move to an alternatively fuelled car.

Stewart Whyte, director of the Association of Car Fleet Operators, added that the whole system of taxing free fuel was flawed, because the first drivers who would opt out of the benefit would be those using least fuel - i.e those covering low mileages in fuel-efficient cars. He said: 'While the drivers in fuel efficient cars will no longer have a perk, the system does nothing to discourage drivers covering 60,000 miles a year in a 5.0-litre car achieving five miles per gallon The Government is hitting the wrong target.'

Fleet managers and drivers have until the end of the tax year to decide whether to continue with the perk, as it is based on an 'all or nothing' assessment starting from April 6. A spokesman for Deloitte and Touche said: 'The provision of free fuel for private mileage is now unlikely to benefit many company car drivers. We urge employers and drivers to review their fuel position prior to April 5 and where appropriate reimburse the costs of private fuel to eliminate this taxable benefit for 2000/2001. This not only reduces the employee's tax liability, but will also save Class 1A National Insurance Contributions for the employer.'

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

Comments

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