A calculator has been created by GE Capital for fleets that still offer private fuel as a benefit.
Produced by the company’s Key Solutions fleet consultancy team, it creates a detailed picture of the cost of providing private fuel for employers and whether it is of genuine value to employees.
Richard Cox, UK Key Solutions leader at GE Capital Fleet Services, said: “We still come across a surprising number of fleets offering private fuel as a benefit – and I say ‘surprising’ because it proves to be of genuine financial value to company car drivers in only very few cases.”
He pointed to a recent study undertaken by GE using the calculator that indicated 20% tax payers would need to be covering an average of around 8,000 miles a year in the car and 40% tax payers double that before they accrued any benefit from private fuel.
He said: “This is a fairly typical picture. With the national annual average for private miles staying steady at around 10,000 miles, employees are paying more in tax than they receive in benefit.
“Additionally, there is quite a high cost to actually providing private fuel for the employer.
“Part of this comes from NIC payments on benefit-in-kind, part is an administrative cost but also providing private fuel tends to lead to a more cavalier attitude to fuel use and a less frugal approach to identifying the best pump prices.
“In this example, there were actually no company car drivers within the company who were gaining any genuine benefit from private fuel but it cost the employer a significant amount. The sensible option was to withdraw it.”
However, Cox added, the picture could be different for company van drivers thanks to a different taxation structure for light commercial vehicles.
He said: “The breakeven point for van drivers will tend to be much lower than for cars. In our example, the average was less than 1,500 miles, so it is quite a worthwhile benefit and potentially withdrawing it is a much more difficult decision.”
Login to comment
Comments
No comments have been made yet.