Fleet News

National Insurance rise hits free fuel firms hardest, says Lex Autolease

Lex Autolease estimates that 3% of firms in the UK currently fork out for this outdated benefit, despite the growing impact of fuel and tax rises.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 It falls into the same category of benefit as a final salary pension scheme which many organisations have withdrawn from.”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.”

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  • adamrollins - 16/03/2011 15:59

    Drivers who take free fuel as a benefit should also look closely at the cost of the benefit in kind tax they pay. Private mileage needs to be relatively high before the cost of the tax is less than the cost of the fuel. Not forgetting someone (the employer) still has to pay for the fuel anyway. In the overall picture, providing fuel as a benefit is rarely (if ever)cost effective and if the driver uses less value of fuel than the BIK they pay, the overall costs are more than double what the total fuel spend alone would have been. I have to agree that employers should take other measures such as additional salary or bonus; then provide a fuel card in conjunction with Midas FMS mileage management, so drivers don't have to lay out their own cash and can make good the private mileage, removing the BIK liability. Adam Rollins www.midas-fms.com

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