Fleet News

FuelWise: Free fleet fuel error over UK card usage

MANY fleets still wrongly believe that fuel cards can only be used by drivers who receive free fuel as part of their benefits package.

A fuel audit completed by fleet and fuel management company Arval in 2004 revealed that many companies associate a fuel card with free fuel – and bosses believe the situation has not changed this year.

As a result, if a company decides to remove the benefit of free fuel for private mileage for employees, the fuel cards are taken away as well.

But they could soon be needed again. Arval says that if, as expected, UK law is amended to fully comply with the European Sixth Directive, fuel cards would be one of the only purchasing tools available that allow companies to recoup VAT from business fuel costs.

In March, Fleet News, in conjunction with Arval, launched the FuelWise campaign, to help fleet decision-makers deal with the impending change to the way firms deal with fuel.

The European Sixth Directive states that VAT on fuel can only be reclaimed if the purchase was made by a VAT-registered company. Therefore, if an individual purchases the fuel using a private card or cash, then the employer cannot reclaim VAT. Estimates vary, but a worst case scenario puts the cost to the fleet industry at £1.2 billion.

Mike Waters, head of market analysis at Arval, said: ‘Fuel cards should have no impact on an employer’s decision to make private fuel part of an employee’s flexible benefits package.

‘Fuel cards are an easy-to-use, VAT-approved management tool that ensures companies are able to manage and control fuel spend. By using mileage logging techniques, employers can easily make the split between business and private mileage for all drivers using a fuel card.’

  • To view other FuelWise stories click on the FuelWise logo on the left of our homepage.
  • Leave a comment for your chance to win £20 of John Lewis vouchers.

    Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

    Login to comment

    Comments

    No comments have been made yet.

    Compare costs of your company cars

    Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

    What is your BIK car tax liability?

    The Fleet News car tax calculator lets you work out tax costs for both employer and employee