Employees and business pay the price for ‘free’ fuel

Hundreds of thousands of company car drivers continue to be in receipt of employer payments for fuel used privately. But almost all would be better off - and so would their employer - if they gave up the ‘benefit’.

Although benefit-in-kind tax on the ‘perk’ has increased dramatically since the late-1990s, latest data from HM Revenue & Customs (HMRC) estimates that 350,000 employees continue to pay tax on the ‘benefit’.

But tax experts say that almost all employees would be financially better off if they gave up the ‘perk’ and paid for fuel used privately out of their own pocket. In addition, businesses would trim their Class 1A National Insurance contributions which are paid on benefits-in-kind as well as cut their fuel bills.

Additionally, with businesses increasing their environmental focus there is a widespread perception that by continuing to offer the ‘benefit’ employers are encouraging staff to clock up more miles as well as footing the bill themselves.

Historically, so-called ‘free’ fuel was seen as a valuable employee benefit. But year-on-year tax increases from 1998 to 2003 saw a doubling of tax rates. In April 2003 the ‘free’ fuel tax system was changed to one based on a company car’s carbon dioxide emissions - the same percentage figure used to calculate the car benefit charge - multiplied by a set figure for the tax year.

Until April 6, 2008 that set figure was £14,400, but has now been increased to £16,900 with the Government promising to increase the multiplier at least by the rate of inflation each financial year, although it has not been increased in the current financial year.

According to HMRC, 570,000 employees benefited from ‘free’ fuel in 2002/3. Statistics highlight that while there has been a steady decline in the figures in recent years, in 2006/7, 360,000 employees continued to be in receipt of company-funded fuel used privately and that figure only fell to an estimated 350,000 in 2007/8, the most recent year for which data is available.

Yet financial experts have for many years recommended the wholesale withdrawl of the ‘perk’ and, for the handful of employees who will lose out - typically drivers of very low emission cars and those who clock up extremely high private mileages - a compensation package should be agreed.

However, the latter issue poses the question as to whether cost-conscious employers should continue to fund employees to travel a high number of miles in their own time at the company’s expense.

As cash-strapped companies grapple with the recession, Fleet Support Group has promoted the need for firms to adopt ‘an action plan to cut fleet costs’.

FSG Chairman Geoffrey Bray said: “Despite financial advice to the contrary over many years, it is staggering that more than a third of a million employees continue to be in receipt of ‘free’ fuel.

“We would recommend that any employer continuing to fund the benefit withdraws it and if they need help to justify the reasons why then our financial experts will assist with calculations.”

Number of company car drivers and ‘free’ fuel beneficiaries

Source: HM Revenue and Customs

Major brewer signs up with FSG to increase driver safety

One of the UK’s largest brewing companies is issuing Permits to Drive to more than 1,000 drivers across the company to ensure maximum occupational road risk management compliance.

Molson Coors Brewing Company (UK) Ltd, the UK’s second largest brewer, is the latest organisation to sign up to Fleet Supports Group's web-enabled RiskMaster programme.

The company’s 900 company car and cash allowance drivers are signing up to the initiative this month alongside 200 other employees who claim business mileage reimbursement on a regular basis

Meanwhile, the brewer’s remaining 1,300 employees are being surveyed to determine whether they drive on business and, if so, whether they typically take to the wheel of their own car, a company vehicle or a hire vehicle.

Molson Coors’ decision to introduce the multi-award winning RiskMaster programme and issue Permits to Drive to all at-work drivers bolsters the company’s long-established driver training and risk management relationship with Drive & Survive, an FSG partner company.

Molson Coors has undertaken an extensive advance communications programme with all staff informing them about RiskMaster and the reasons behind its adoption, which is unique amongst RiskMaster customers.

In addition, it is the first time a RiskMaster customer has undertaken a survey among all its employees to identify exactly who was likely to clock up even one mile on company business in the future.

FSG’s RiskMaster Manager Daryl Cottle said: “Molson Coors’ decision to embark on a far-reaching communication strategy with staff and complete a driver survey has been excellent.

“We always stress to customers the importance of advance communication when introducing RiskMaster and to ensure that they enrol all business drivers on the system.”

Keith Abell, Contracts Manager at Molson Coors, said: “Occupational road risk management has been high on our agenda for many years. We have turned to RiskMaster to make our existing processes even more rigorous. We want to ensure that our duty of care towards our at-work drivers is covered across all eventualities.”

The accident rate at Molson Coors has gradually reduced in recent years and there have been no major incidents where the company’s duty of care regime had been called into question.

Molson Coors’ drivers are granted a Permit to Drive following a DVLA licence check. An online driving ‘test’ is then used to profile drivers as ‘low’, ‘medium’ or ‘high’ risk with the assessment used as the basis for future on-the-road driver training. Vehicle maintenance records, insurance details, MoT records, and any data on crashes and motoring offences are also fed into the system.

The system creates an individual and comprehensive Driver Operating Life Report from which data is used to continually assess individual drivers in their driving-at-work activity.

FSG Chairman Geoffrey Bray said: “We are challenging all businesses to undertake a series of checks to make sure that they have comprehensive and auditable records that show they are managing drivers, vehicles and journeys in line with best practice.

“Molson Coors took up the challenge and recognised improvements to existing risk management processes could be made, which we are now helping to put into place.

FSG calls on organisations to back national Road Safety Week 2009

Fleet Support Group is calling on customers to support national Road Safety Week being held from November 23-29, 2009.

Road Safety Week, which is co-sponsored by the Department for Transport, is organised by road safety charity Brake and is aimed at encouraging businesses to introduce safe at-work driving initiatives to help cut the number of deaths and injuries on UK roads.

This year’s Road Safety Week theme is Not a Drop. Not a Drag (don’t drink or take drugs and drive).

Latest Department for Transport figures reveal that in 2008 a total of 2,538 people were killed and 228,367 injured in 170,591 road accidents.

While the number of road deaths and injuries are reducing, it is estimated by the Government that around a third of all casualties are the result of road crashes involving at-work drivers - a figure totally disproportionate with the number of vehicles on the road being driven on business.

FSG is already a multiple winner of awards from the Fleet Safety Forum, a division of Brake, for its industry-leading online occupational road risk management solution, RiskMaster. In addition, at this year’s Forum awards, FSG Chairman Geoffrey Bray won the Kevin Storey Award for Outstanding Commitment to Road Safety.

RiskMaster is in demand from an increasing number of fleets including Dun & Bradstreet, WHSmith, Balfour Beatty Utility Services, Unison and the Labour Party.

Mr Bray said: “Implementing a robust at-work driving safety strategy should be a priority for all businesses. Public and private sector fleets have a legal duty to safeguard the welfare of staff, but they also have a duty to comply with a raft of legislation which can only be achieved by having in place such a policy.

“Not only that, but evidence from our RiskMaster clients shows that managing occupational road risk effectively cuts road crashes. As a result, significant financial savings accrue as well as improved business productivity as vehicle downtime is slashed.

“Organisations that have so far failed to introduce safe at-work driving policies and procedures should use the build-up to Road Safety Week as the catalyst for change.”

Brake is urging, and supporting, organisations to educate and communicate key road safety messages to employees, their family and the community during road safety week.

For an information pack, and to register for Brake support during Road Safety Week, contact Katie Shephard on 01484 559974 or kshephard@brake.org.uk go online at www.roadsafetyweek.org

Could RV boom spark new car acquisition by fleets?

Residual value doom has been replaced with buoyancy as used car values have rocketed by up to around 25% and into uncharted territory, according to experts.

With a massive stock shortage being reported across the used car buying network, businesses with flexible fleet acquisition policies could reap unexpected financial dividends.

With motor manufacturers and dealers still suffering from a UK new car market down 25.9% in the first six months of this year, a combination of the Government and carmakers-backed scrappage scheme and volume-related bonuses and discounts means that the ‘cost of change’ may never have been lower.

Simultaneously, companies that are able to dip into the new car market will ultimately also be cutting vehicle operating costs as they benefit from the latest available emissions-busting, fuel-sipping technology.

BCA, Britain’s largest vehicle auction company, said its used car price index jumped to an all-time high at the end of the second quarter of 2009.

Meanwhile, chief rival Manheim says the average wholesale used car value in the fleet sector was £6,403 - the highest since it started reporting price data in 2003.

The sustained price acceleration in recent months follows the credit crunch-induced residual value crash in mid-2008, which saw prices reach ‘rock bottom’ in autumn 2008.

BCA’s Communications Director Tony Gannon said: “The current supply and demand equation is keeping prices high. Stock levels remain relatively low, and certainly behind normal levels for the current period in previous years. Consumer demand remains firm and with the vast majority of vehicles on offer being sold, conversion rates remain exceptionally high and values reflect this.”

Remarkably, used car market conditions are such that BCA says the current imbalance in the vehicle supply and demand equation means that cars in CAP ‘average’ condition are being bid up to ‘clean’ values and above and, as such, 2009 continues to ‘out-perform 2008 by a considerable margin’.

And it is not just used car values that are buoyant, with BCA also signalling that average values in the used van market have increased to around £3,500, well ahead of the low point of £2,772 recorded last December.

Mike Pilkington, Managing Director of Manheim Auctions and Remarketing, concluded: “The recovery this year has caught us somewhat by surprise, not the fact that it has happened after what was quite a challenging time last year, but by the fact that it has lasted so long. Consumer demand encouraged dealers to focus on used car retailing and despite the recent stimulus into new car sales following the launch of the scrappage scheme it seems that this healthy period for used cars is set to continue for some time yet.”

More FSG employees win praise for ‘going the extra mile’

Fleet Support Group chief Geoffrey Bray believes that all customers deserve ‘good old fashioned first class service’.

That is the concept behind FSG’s ‘Going the Extra Mile’, which is designed to ensure that all staff deliver service standards that are unmatched by their rivals.

It is such courtesy and assistance to fleet decision-makers and business drivers that has seen FSG grow from a start-up company almost 22 years ago to being Britain’s largest privately-owned fleet management business with a fleet of 55,000 vehicles on its books - 27,000 company cars, 20,000 light commercial vehicles and 8,000 trucks.

Below, Flagship publishes some of the most recent comments received from satisfied fleet managers and drivers since the ‘Going the Extra Mile’ initiative was launched.

From David Robertson, Network Rail, to Paul Bayly, Operations Department: “Thanks, Paul for the e-mail and getting the fuel paid. Great job, as always you’re top of the customer service league.”

From Steven Wood, T&S Services, to FSG Truckmaster Division: “What can I say, the best service for both the operator and the workshop, a very good team always very helpful. FSG is my first recommendation to all operators. Well done to everyone.”

From Jack Pryde, Dunfirmline Building Society, to Amanda Khoury, FSG Bookings Department: “I received a phone call from my daughter who was travelling back with her husband and kids from a week in France. On the M25 the fan belt to drive the alternator snapped. So, I contacted FSG and Mandy took the call. While this was not a company vehicle, she took the problem on board and totally saved the day! She found a breakdown service that could attend, she found a supplier who had the fan belt, married both these companies up and managed the whole situation until a successful result was made and the family were en-route to Scotland. I thought that a word of commendation for Mandy was called for and if there is an internal award for ‘Employee of the Month’, can I nominate her for it.”

From Kev Over, Network Rail, to Laura Hemmings, CrashMaster Division: “Laura has been dealing with the repair of one of my vehicles. She has my sincere thanks for the way she has dealt with this issue. I have been kept well informed with the progress of the repairs with very detailed information. Although the vehicle took longer than expected to get repaired I was confident that Laura was on the case.”