Fleet News

Drivers losing out as fuel costs soar

FLEETS are calling on the Government to review the advisory fuel rates they use to reimburse staff for business mileage amid concerns that soaring prices at the pump are leaving company car drivers out of pocket.

Prices at the pumps have escalated throughout the summer with the latest round of increases caused by rising oil prices as a result of Hurricane Katrina in the USA.

The Association of Car Fleet Operators (ACFO) has been contacted by members seeking advice on reimbursement rates.

It is now calling on HM Revenue & Customs to review the advisory rates, saying prices have risen by more than 10% in some areas since they were set in July. They were based on unleaded petrol costing 88.2p a litre and diesel costing 91.7p a litre. Average prices are now 97.6p per litre for diesel and 95p for unleaded.

HM Revenue & Customs said it would review the rates during a tax year when fuel prices vary by more than 10% from when the rates were announced.

ACFO says there is ‘irrefutable evidence’ that prices have now increased to levels that are at or above the 10% increase level.

Director Stewart Whyte said: ‘HM Revenue & Customs promised to review the rates if fuel price increased by 10%, but it has not done so.’

He added: ‘With no increase in the tax-free Advisory Fuel Rates, many drivers are already losing money with every mile they drive on business – and employers cannot help without generating a tax liability.

‘It seems certain that the price of the main road fuels will now stay relatively high for the rest of 2005 and beyond. ACFO, therefore, wants a thorough review of the Advisory Fuel Rates for company cars, with better guidelines about the flexibility to take account of local circumstances available under the present rules.’

Last week, executives at Arval said many companies were complaining that the rates do not adequately reimburse drivers and that many were considering ditching pay and reclaim in favour of fuel cards.

An HMRC spokesman said: ‘In the light of recent sustained increases in fuel prices, HMRC announced that from July 1, 2005 the rates for both diesel and petrol cars over 2,000cc would be increased. There has not been a further increase since then. We have a commitment to review the rates if they increase by 10% although we would need to be sure that any further increase was likely to be sustained.’

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