Caroline Sandall, fleet and travel manager for Orange, made the warning amid confusion over whether companies need to scrap fuel cards if they stop providing the benefit of free fuel for private mileage.
Orange has an 1,800-vehicle fleet, of which 1,000 drivers have AllStar fuel cards. Of those 1,000, only about half receive free fuel for private mileage. Drivers without fuel cards generally cover very low mileages.
The fleet has a fuel bill of £2 million and Sandall said using fuel cards offers a key method of keeping fuel costs under control, to identify trends swiftly and effectively. Using fuel cards has also provided Orange with an easy way of identifying whether drivers are benefiting from free fuel for private mileage and enabling the firm to offer suggestions on whether drivers should opt-out or not.
Sandall added: 'Our investment into our fleet operation, in terms of time and money, is immense. To protect this investment we know we must develop strategies to ensure that external factors, such as taxation hikes on free fuel, do not cripple our fleet operation.
'Although Orange has worked with its drivers to decide who would be better off without free fuel, it is still vital that all business mileage claims are accurately recorded and reimbursed.
'Pay and reclaim is not a feasible option because of the time taken to process each receipt. It also gives us less control over what the employee is claiming for, as the odd packet of crisps or sweets can easily be hidden in the receipt.'
Chancellor of the Exchequer Gordon Brown has increased the fuel scale charge, the tax on the benefit of receiving free fuel for private mileage, by 16% this year, the last in a five-year package of tax increases designed to wipe out the benefit.
Only 2% of Orange drivers receiving the benefit opted out following the latest tax hike, with Sandall saying those who pay more in tax than they receive in free fuel believe the benefit of having a hassle-free fuel card is worth the cost. Alternatively, they hope fuel prices will increase to create a benefit again.
If drivers have opted out, the AllStar Mileage Capture System allows them to record business mileage by supplying the details over the phone or the internet. The cost of private fuel can then be automatically deducted from their salaries.
Sandall added: 'The method of calculation will be acceptable to our local Inland Revenue office, which means that we benefit from both significantly reduced administration and the comfort of being within the tax guidelines.'
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