THOUSANDS of drivers in cash-for-car schemes are being short-changed when claiming back the cost of running their vehicles on business, according to a new survey.

Many employers reimburse staff for running vehicles at less than the Inland Revenue Approved Mileage Allowance Payments, the Government's agreed limit at which payments are tax and National Insurance-free.

But if drivers receive less than their full allowance from their employer, which for car drivers is 40p for the first 10,000 business miles and 25p thereafter, they can claim tax relief on the difference.

However, according to Cash for Car Club, a third of drivers who receive less than the full allowance are not claiming back the difference through lower tax bills. For some drivers, their claims could run into hundreds of pounds that they could have taken straight off their taxable income.

To combat the problem, Cash For Car Club has introduced a 'Business Mileage Taxation Health Check'. The Taxation Health Check is on the firm's website, www.Cash4CarClub.com and access is free.

The site was launched earlier this year and offers vehicle purchasing, both from the UK and abroad, vehicle funding, breakdown cover, servicing and a range of other services through a number of providers.

Customers must pay a £60 annual fee to become a full member of the club, which the firm says gives them access to discounts on services and low funding rates. For large companies the firm will provide a branded website, through which employees can access the web-based service.

Nick Moger, founder of the club, who also runs Cars From Europe which imports vehicles from abroad, said: 'Our aim is to provide unambiguous advice so that people know where they stand and what their best alternatives are.'