Exclusive Fleet News research last month (Fleet News, November 19) highlighted how many county councils are paying their grey fleet drivers 53 pence per mile when annual lump sum payments are taken into account.

However, several other county councils do not pay their grey fleet drivers a lump sum at all.

This is leading to a massive variance in the rates some county councils pay their grey fleet drivers compared to others.

For example, a grey fleet driver in Gloucestershire will receive £1,991 less than one in Staffordshire for covering the same annual distance of 10,000 miles.

Much of this difference is because Staffordshire makes an annual lump sum payment, while Gloucestershire does not pay a lump sum.

The BVRLA has put its weight behind the call for councils to respect the AMAP rates.

Speaking at the recent Office of Government Commerce (OGC) grey fleet conference, BVRLA chief executive John Lewis said: “Many employers are giving mileage payments of 50, 60 or even 70p per mile, which is far above the maximum tax free AMAP rate of 40p per mile.

“Our own estimates suggest that a realistic AMAP rate for the average grey fleet car would be more in the range of 20-30p per mile.”

The Treasury says its Approved Mileage Allowance Payments (AMAP) rates set an appropriate level of reimbursement for those who drive their own vehicles for business.

It says 40 pence per mile is suitable for the first 10,000 miles, dropping to 25ppm for any subsequent miles travelled on business each year.

But as the research revealed, the majority of county councils quizzed continue to pay their grey fleet drivers an annual lump sum on top of their mileage rates which, in the majority of cases, takes their grey fleet payments above AMAP rates.

Employees who receive more than AMAP rates are taxed on this extra income.

So why are some councils continuing to pay above accepted rates?

According to Unison, the issue stems from its belief that AMAP rates are not high enough.

Therefore the unions have negotiated their own national agreement with public sector bodies.

“AMAP rates are too low and we believe they should be increased – they don’t fit the actual costs,” explained Unison’s Lucille Thirlby, who sits on the National Joint Council (NJC) which agrees new grey fleet reimbursement rates every April.

“Employers want to review these payments and we know they want to go down to AMAP levels – but we will resist this.”

However, while NJC rates, which always exceed AMAPs, are agreed nationally, public sector employers have the power to negotiate them down at a local level.

This includes annual lump sum payments that are set by the NJC in addition to the mileage reimbursement rates.

These lump sum payments are meant to cover standing and maintenance costs such as insurance and tyres as well as to reflect the increasing cost of buying a used car.

HMRC says its AMAP rates are sufficient to cover all costs associated with using a private car on business (fuel, insurance, depreciation and wear and tear) and there is no need for an additional lump sum payment.

“The single rate covers all types of vehicle and engine sizes and was set to encourage the use of smaller, more environmentally-friendly cars and aimed to reduce any incentive for employees to drive excessive mileage in larger and less efficient cars,” said a HMRC spokesman.

”They were set at a rate that was generous for small car drivers.”

The unions disagree and the employers are stuck in the middle.

But with the focus now firmly on cost-cutting, some county councils are using their local negotiating powers to drive down payments.

Some, such as Essex and Herefordshire, now do not pay above AMAP rates and do not pay any lump sums.

Others, such as Gloucestershire and West Sussex, have locally agreed to pay their grey fleet drivers below AMAP rates, although employees can claim the difference via a self-assessment tax return form.