Letters

Fuel rate furore is penny-wise but pound-foolish

While many fleet managers feel understandably aggrieved by HMRC’s decision to reduce its advisory fuel rates when pump prices are rising, it should be borne in mind that these rates are neither mandatory nor prescriptive. 

Fleets can pay their company car drivers any fuel expenses rate they want, provided they can demonstrate to HMRC that the rate they pay is less than or equal to the actual cost of fuel used. If so, there is no liability for benefit-in-kind tax. The calculations and record-keeping required to do this are far from onerous. 

Today’s volatile pump prices and cars’ rapidly-improving fuel efficiency mean that actual mileage costs are as likely to undershoot the advisory rates during a six-month period as to overshoot them. That is what happened from the middle of last year until quite recently. 

Since last July, a driver covering 250 miles a week in a typical 46mpg diesel car would have made a tax-free profit of more than £130 at their employers’ expense, had the employer stuck rigidly to the advisory fuel rates. Someone driving a 55mpg car would have made £350. Strangely, there were no complaints from fleets at the time!

As this example shows, fixed-rate fuel expenses are potentially costly. To focus on the HMRC rates, rather than the wider issue of paying every driver neither too much nor too little for the fuel they use, seems to be a case of being penny-wise but pound-foolish, as well as misunderstanding why the advisory rates were introduced in the first place.

 

Paul Hollick
General manager, sales development, Alphabet (GB)

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Oil check tip

I feel there was one small omission from your article (How regular checks can oil the wheels of an efficient fleet’, June 18).

When checking a vehicle’s oil level it is advisable to have the vehicle on a level surface prior to checking to get an accurate reading. If you are parked on a slope, this could give a false reading on the dipstick.

Drivers should also be made aware that too much oil in the engine can be just as damaging as too little as this will damage the catalytic converter and involve a very high repair/replacement cost.

 

Ann Dukanovic MICFM
Fleet manager, Kaba Door Systems