Fleet News

Fleet Panel: Business miles look set to fall

THE Government has put company cars at the forefront of its battle to clean up the environment, using the new carbon dioxide-based company car tax system as a weapon.

Despite the controversy surrounding the new system, launched next month, a key benefit will be the removal of tax breaks offered under the current regime for covering high business mileages.

Inland Revenue estimates suggest the current system encourages drivers to cover billions of unnecessary miles in order to reach business mileage targets that would reduce their tax bills. The new system has done away with these mileage tax breaks, leading industry experts to predict a massive fall in the levels of business mileage covered by employees.

Research among our fleet panel this week proves this prediction to be well-founded, with the majority of fleet managers believing they will see the total business mileage covered by their staff reduce.

This not only benefits the environment, but lowers fuel bills and reduces vehicle wear and tear costs because drivers are covering lower mileages.

Furthermore, many companies report that drivers may have been submitting false mileage claims for journeys not actually covered, just to ensure they reached a higher mileage band.

The majority of fleet managers believe the new system will lead to a reduction in mileage, with some already investing in video-conferencing technology and introducing car sharing programmes.

However, a number of fleets also point out that their high business mileages are absolutely necessary and that the new system simply penalises their business-use drivers for doing their jobs.

##Yes 62--left## ##No 38--right##

'Do you expect your total fleet mileage to fall in the next tax year, following the abolition of tax incentives for company car drivers to clock up business miles?'

'The new system will reduce business mileage marginally and also there will be no false claims for reimbursement, which, in my opinion, was in excess of 50% of returns.'
M.H Details supplied

'I would not expect the figure to reduce by a significant or even measurable amount. Many of our drivers who have so-called 'perk cars' do in fact drive high mileages.'
John Clarke, Fleet Services (South) Telewest

'Our mileage will not change significantly. Apart from anything else, I would like to think we do not have anyone sad enough to have been driving aimlessly around for thousands of miles to save a few pounds a month - get a life.'
Steve Skelly, Rowley Ashworth Solicitors

'The old system of discounting tax charges for those who rack up business miles was ridiculous. We campaigned for a car tax system that penalised those who did large private mileages (i.e. got a large personal benefit) to no avail. I appreciate the Government's desire to move us into more environmentally- friendly cars but surely the taxation system should reflect the actual private benefit received more fairly. Let's have a discount structure that is based on private mileage.'
G.R Details supplied

'No. With the exception of one or two cases, our drivers are already well over the 18,000 limit on business miles. One or two of the 'marginal' drivers will have been guilty of doing excess mileage, but these are in the minority.'
R.W Details supplied

'Yes. In our company's forecast, drivers will be expected to double up whenever possible on business trips.'
Nick Welch, Pinnacle

'Across the whole organisation, I think the answer is a resounding yes. We have a number of genuinely high mileage drivers who cover 25,000 –35,000 business miles per year who will continue to do the same - whether they will decide to use the train or fly remains to be seen. It is those drivers who work around the fringes of the tax breaks that will almost certainly reduce next year.
From the remainder of our fleet, we have a number who creep into the 18,000–20,000 mile category - my expectation is that these drivers will not attain the 18,000-mile number next year. Similarly, some of the more office-based perk drivers are unlikely to get to 2,500 miles, especially if they can make their way to conferences, etc, by train instead.'
Martin Dowsett, systems and admin manager, Komori

'Yes, but only slightly as drivers are mostly aware of their business mileage and it is only the marginal ones, who would otherwise only just miss the mileage break, who would be affected. I think the rest are sensible enough to know that if they aren't anywhere near the break-point they don't need to take the scenic route. Abolition of free fuel provision is likely to have a much larger affect as employees avoid the marginal cost of private journeys! Nice one Gordon.'
Dave Gill, fleet manager, JM Computing

'Fleet mileages have shown considerable reduction in the recent past as most of our drivers have now become aware - via the wallet - that excessive mileages will not assist their tax situation. We anticipate they have probably now fallen to the level beyond which they will not reduce.'
I.F Details supplied

'I have no evidence to support this response, other than a high degree of cynicism. Of course, all of my drivers will strenuously defend their current business trips as being wholly necessary.
However, next year will see a drop, I have no doubt, and I am sure that my drivers will say it is because they are heeding the Government's message to think of the environment and have adjusted their mileages accordingly (and, of course, I will believe them totally!).'
Alan Miles, administration & data protection manager, RNIB

'The simple answer is no. There was always an inference that company car drivers covered more business mileage than necessary in order to achieve the lower taxation bracket. In this company, the very nature of our business means that more than 92% of our drivers have no option but to do more than 18,000 business miles a year, and this will not change.'
Chris Bates, facilities manager, Lafarge

'Yes, but it is difficult to quantify at this early stage. I fully expect the train to take more of the strain in the coming year, especially on London trips.
Glyn Davies, finance director, Staedtler

'Yes, marginally, but one could, however, guess that business-to-private split on our mileage returns may well be more ... honest shall we say!'
A.M Details supplied

'Where possible people will use technology more effectively to communicate, thereby limiting face-to-face meetings and journeys.
They may even use public transport more if reliability improves. I am aware in our organisation of a number of staff who are now expressing their wish to stay in hotels/B&Bs rather than returning to base each night. They no longer feel forced to travel 18,000 business miles a year in what was essentially a tax-saving exercise.'
Ian Smith, group accountant, CpiO

'Yes, though there are other factors which will probably have a greater affect than the tax changes, e.g. increased number of field-based staff.'
Nigel Trotman, Whitbread

'No, because most of our drivers travel less than 18,000 miles. In fleets with business mileages close to 18,000, I would expect to see a reduction.'
S.P Details supplied

'We have introduced a scheme to encourage our drivers to cut down purely on their business mileages, with prizes at the end of the year. Although 95% of our drivers cover 20,000-plus miles a year, we still think there is room to trim this figure.'
Mark Nicholls, fleet controller, Grundfos Pumps

'I would expect to see a reduction in overall mileage as I believe more employees will use the most efficient mode of transport to complete their trip - public transport, car share etc, due to the removal of mileage bands having no bearing on their tax liability.'
Karen Ramsden, Oracle

'No. Under the current scheme we band the drivers according to the business miles travelled in the tax year, and they are therefore taxed accordingly. As a representative-based company, their areas will remain the same size and so their mileage will also remain the same. Therefore the new tax regime will have no impact on the mileage aspect.'
Sarah Messingham, fleet manager, J A Magson

'I believe there will be a reduction but not for the reason stated as I do not believe that drivers did additional journeys to add miles under the outgoing system in any great numbers. However, with the increasing tax burden on private fuel which incorporates travel to the workplace I do see a lot more car sharing, which will reduce the miles travelled. In addition, with the onset of PCP schemes, drivers will be much more wary about putting miles on to the car due to the penalties they will get on termination and they will therefore plan their journeys to be more cost and time effective.'
Mick Donovan, group fleet manager, Bowmer & Kirkland

'Our main sales fleet size won't change but the option to 'opt out' recently introduced to our directors may mean the executive element of our fleet mileage will reduce.'
G.K.G Details supplied

'I expect it to stay the same. I would also expect the same from most companies to be honest. It depends on the nature of the business and some businesses demand high mileages.'
G.O Details supplied

'Theoretically there should be no difference but in reality there is very likely to be a significant fall. This welcome side-effect should prove beneficial all round, from reduced damage to the environment to possible increased residual values. Perhaps a more economical and commonsense approach to travel arrangements will be encouraged without the compulsion to bump up business mileage for selfish reasons.'
Chris Fitzpatrick, area fleet co-ordinator, Telewest Broadband

'We do not expect our total fleet mileage to fall and if anything it is likely to increase as a result of increased business activity. What we are seeing though, is a trend towards drivers making more tax-efficient vehicle selection decisions.'
Peter Eldridge, fleet manager, Motorcare Holdings

83 fleet decision-makers voted this week. To make your voice heard and your vote count, please join the Fleet Panel. Simply email: jonathan.manning@emap.com

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