With the announcement that Brown’s Pre-Budget report is due on December 5, the Association of Car Fleet Operators, which has been campaigning for a change in the Approved Mileage Allowance Payments (AMAPs), believes now is the time to announce a revised structure of the rebates available to drivers covering business mileage in private cars.
It claims that the current rates are too generous and are encouraging business motorists into private – and gas guzzling – cars, where they can make profit out of high business mileages. ACFO has submitted an alternative suggestion for how the scheme could work.
Stewart Whyte, director of ACFO, said: ‘The current rates are realistic for most cars for relatively low business mileage, but hopelessly over-generous for higher levels of business miles. It is clear that many employers use over-generous tax-free mileage rates to supplement inadequate basic rates of pay and salary. This is now unacceptable.’
At a recent Pre-Budget Report meeting with Financial Secretary to the Treasury, John Healey MP, ACFO renewed its campaign to get the rates changed.
For more than two years ACFO has urged a review of the AMAP structure and the tax-free mileage rates.
Whyte added: ‘It is also clear that many company car alternative schemes actively feature the generous tax-free Inland Revenue mileage rates as the basis of putting together personal ownership arrangements. This is taking many drivers out of a controlled and disciplined fleet environment into one where ‘free choice and tax free!’ appears to be the major selling point.’
At present AMAPs are structured so there is a 40p per mile reimbursement for the first 10,000 miles and 25p a mile thereafter.
ACFO believes this goes against the Government’s and Revenue and Customs’ general approach to discourage unnecessary mileage.
While it seems likely that there will be some restructuring of the rates in the Budget, ACFO seeks, as a specific objective, the 10,000-mile threshold to be lowered, to a figure more like the 4,000-mile level that was in place until 2002.
Whyte has gone further, in proposing a scheme which would see a payment of up to £1 per mile for the first 500 business miles, approximately 40p from 501-4,000 business miles and about 20p per mile thereafter.
He believes this would be more accommodating to all private business drivers, with the first 500 miles used to offset the extra insurance costs for private travel without incentivising company car drivers to opt out. However, there are some concerns that a three-tier scheme could prove too confusing.