Fleet industry calls for HMRC to provide advisory fuel rates (AFRs) for plug-in company cars have been ignored by the Government.
Proposed rates for 100% electric vehicles (EVs), range-extended EVs, and plug-in hybrid petrol and diesel models had been submitted by fleet representative body ACFO.
However, an HMRC spokesman told Fleet News there would be “no change” to its approach on AFRs.
Instead, hybrid cars will continue to be classified according to the type of fuel used in the hybrid system and pure EVs remain in limbo, because electricity is not regarded as a fuel in law so the fuel benefit charge cannot apply.
ACFO has vowed to continue lobbying HMRC to publish AFRs for plug-in cars, but acknowledged the Government’s refusal to recognise electricity as a fuel was key.
Caroline Sandall, ACFO deputy chair and director at ESE Consulting, told delegates at ACFO’s autumn seminar: “We’ve still got that ongoing battle, which we will continue to fight, because companies need a rate, and they need a reliable rate – something solid and sensible.”
AFRs apply where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel. Published quarterly, they provide a range of rates based on engine size and fuel type (petrol, diesel or LPG), and, when used, are deemed to be tax-free.
ACFO says company car drivers should be paid from 4ppm (pence per mile) for pure EVs and 5ppm for plug-in hybrids.
The calculations for plug-in cars follow a similar format to existing AFRs and account for the mean battery capacity from manufacturers’ information, weighted by available models and average battery capacity (kWh).
Electric mileage range, adjusted downwards by 15% to take account of real driving conditions and impact on manufacturers’ stated range, also helps determine the rates, as does the average battery recharge cost.
It allows the plug-in rates to use the same AFR bandings based on engine capacity; they are simply adjusted for electric mileage range. The greater the zero-emission mileage range of a vehicle, the lower the reimbursement rate.
More than eight out 10 respondents to a Fleet News poll said mileage reimbursement rates which reflect real-world driving for hybrid company cars should be published by HMRC.
ACFO argues it is vital that rates are published, particularly given company car benefit-in-kind (BIK) tax rates for ultra-low emission vehicles from April 2020 will be linked to a car’s zero-emission mileage range.
But, while HMRC shows no sign of adopting ACFO’s model, Sandall suggested fleets could still use its plug-in rates as a guide. She said: “We think it’s something that is usable, is good guidance, and should help you to come up with a rate which is reasonable and more reflective of what people are actually doing.”
ACFO argues that without an incentive linked to how an ultra-low emission vehicle is used on the road, drivers will continue to use the combustion engine alone in a plug-in hybrid car.
Recently released data from The Miles Consultancy (TMC) highlighted this trend, with worryingly high fuel consumption and emissions in real-world driving for hybrid vehicles.
The data showed plug-in hybrids to be among the highest-polluting company cars in terms of greenhouse gas emissions during real-world use by corporate fleets.
The plug-in hybrids in the sample achieved an average of almost 45mpg compared with their average advertised consumption of 130mpg, equivalent to CO2 emissions of 168g/km. That compares with the cars’ advertised emissions which averaged 55g/km.
Paul Hollick, managing director of TMC, said: “PHEVs (plug-in hybrid vehicles) can be a cost-effective choice where drivers cover only moderate mileages; but only if the cars’ batteries are recharged daily.
“On the evidence of our sample, one has to question whether some PHEVs ever see a charging cable.
“In a lot of cases, we see PHEVs never being charged, doing longer drives and this is not a good fit for a lot of business car users. A robust PHEV deployment policy is essential.”