Lex Autolease estimates that 3% of firms in the UK currently fork out for this outdated benefit, despite the growing impact of fuel and tax rises.
The firm calculates that the National Insurance hike from 12.8% to 13.8% will cost these firms an additional £1.25m. However, this excludes the underlying increase in fuel costs incurred at the pump. This too will rise on 1 April as the Fuel Duty rise takes effect and adds 3-4p to a litre of petrol and diesel.
Taken together, private fuel and NIC will cost UK firms, on average, £6 per driver, per day – which equates to over £2,200 annually.
Andrew Hogsden, head of Financial Consultancy at Lex Autolease, said: “Private fuel is one of the most expensive perks a company can provide. It falls into the same category of benefit as a final salary pension scheme which many organisations have withdrawn from.”
Hogsden explains: “Offering free fuel might seem like a nice sweetener to retain or attract employees, but it can be a bitter pill to swallow as it exposes the employer to an ever-increasing fuel bill and National Insurance contributions.
“From a cost control perspective it’s almost always better to pay off these employees with an increase in salary or, better still, a one off bonus which will keep down costs in the long term.”