A survey of 430 companies – with fleet sizes ranging from five cars to more than 1,000 – found that 40% withdrawing the benefit are also taking fuel cards from drivers.
But they are being urged by fleet and fuel management company Arval PHH to remember that free fuel and fuel cards are not related.
Company car drivers who receive free fuel for private mileage pay tax on a percentage of a set value, currently £14,400, using the same scale on which company car tax is based. But the cost of tax is often much more than the value of the fuel drivers are using. Furthermore, employers are also paying tax on the benefit they are giving drivers as well, prompting many fleets to give up the perk.
Arval PHH carried out the research and claims companies ending free fuel are also ridding themselves of a method to manage fleet fuel costs.
Danny Clenaghan, managing director of fuel and business mobility at Arval PHH, said: 'We urge fleet decision-makers to check the numbers and ensure those drivers receiving free fuel are actually better off tax-wise. Most are not, hence the diminishing appeal of this benefit. However, if companies no longer offer free fuel it does not automatically mean drivers should hand back their cards.'
Arval's survey also shows that one in eight drivers (13%) are still unaware of the new CO2-based free fuel taxation system, which was introduced this April, a fact the company describes as 'disturbing'.
Clenaghan added: 'Tax experts such as Alison Chapman from Deloitte and Alastair Kendrick of Ernst & Young have repeatedly told fleets that free fuel and fuel cards are separate issues.
'Without fuel cards, fleets are forced to use pay and reclaim schemes that cause a blizzard of paperwork and an administrative nightmare.'
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