BASIC errors in implementing cash for car schemes could be costing fleets thousands of pounds.

Companies are failing to make full use of tax free payments to staff and overestimating the value of cash allowances, according to fleet consultancy Fleet Logistics.

Graham Rees, UK business development director for the firm, claimed losses could be as high as £2,000 per car in some cases. 'With the move to outsourcing the fleet function over recent years, often companies do not have the internal resources or expertise to investigate and implement complex schemes', he said.

'The key issue for companies to consider is that all drivers will have different circumstances and implementing a blanket scheme will almost certainly lead to failure.'

The only solution is to invest time and resources getting a scheme right before launching it to company car drivers, he said.

Key pitfalls to avoid include not using tax and national insurance-free Approved Mileage Allowance Payments effectively and instead using cash allowances, which incur income tax and NI. Others are neglecting basic homework, such as specifying the type and standard of vehicles drivers are allowed to fund using cash allowances.

Rees added: 'Companies must ensure they have a scheme that is robust, is fair to both drivers and the company, and is flexible enough to evolve with ever changing circumstances.'