Fleet News

ACFO calls for fleet mileage rate update

CONCERNS that fleet drivers are being left out of pocket by high fuel prices have prompted calls for a major Inland Revenue review of advisory fuel rates.

The Association of Car Fleet Operators says fuel price rises during 2004 have had a major impact on company car drivers.

It points out that since January 2002 the mileage rates have been set at 10p per mile for petrol cars and 9p per mile for diesel cars up to 1,400cc, 12p and 9p respectively for cars of 1401cc to 2,000cc and 14p and 12p for cars above 2,000cc.

Advisory fuel rates for company cars apply where employers reimburse employees for business travel in their company cars or require employees to repay the cost of fuel for private use. These rates were based on unleaded petrol costing 77p a litre and diesel 78p a litre with the Inland Revenue saying a review would be made during a tax year when fuel prices vary by more than 10%.

ACFO says they have increased by 10% seince then. Director Stewart Whyte said: ‘The Inland Revenue promises to review the rates if fuel prices increase by 10%, but it has not done so. It stresses that the structure of the rates are ‘advisory’, but within ACFO, we have had several members report difficulties with some tax offices, which appear to take the rates as ‘statutory’ rather than ‘advisory’.

Whyte added that with the national average price of diesel and petrol increasing by more than 11%, according to some market watchers, there have been ‘significant’ regional increases over and above that figure.

‘With no increase in the tax-free advisory fuel rates, drivers are losing money and employers cannot help without generating a tax liability,’ he added.

ACFO is calling for a thorough review of the advisory fuel rates for company cars with either better guidelines about the flexibility available under the present rules or clearer instructions on the flexibility of the structure to take account of local circumstances.

THROUGHOUT last year, ACFO also called for the Inland Revenue to review the whole Approved Mileage Rates system, which sets the structure and rates which can be paid tax-free to employees using their own cars for company business.

It says the current 40p per mile reimbursement for the first 10,000 miles and 25p per mile thereafter is over-generous for higher-mileage drivers, working against the revenue’s general approach to discourage unnecessary mileage.

ACFO wants the 10,000-mile threshold to be lowered to about the 4,000-mile level that was in place in 2002.

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