Fleet Audits counters claims that employees' car mileage allowances subsidise employers

The Fleet Audits consultancy claims that cries from some organisations that employees are subsiding their organizations at the current HMRC tax-free Authorised Mileage Allowance Payments are not borne out in reality - many, it says, make a profit.
 
This verdict comes days before the 2008 Budget in which Chancellor is widely expected to announce a shake-up of the HMRC tax-free Authorised Mileage Allowance Payments (AMAPs).
 
AMAPs allow employees to reclaim a fixed level of costs of business travel in their own vehicles. The current rates were set in 2002 at 40p per mile for the first 10,000 business miles per year and 25p per mile thereafter.
 
Even though motoring costs have escalated, particularly in recent months the fuel component, in the last six years, the consultancy claims that for the overwhelming majority of people claiming mileage reimbursement through the AMAP system, the cost of running their vehicle is materially less than 40p per mile.
 
Fleet Audits spokesman Stewart Whyte said: ¡°It may seem like that to many people, particularly because of the recent rise in fuel prices. However, detailed analysis across all car market sectors and looking at a realistic picture of the total population, across a table of 36 different scenarios, which take full account of vehicle and fuel types, age and mileage travelled shows that current rates are more than adequate to reimburse the overwhelming majority of employees in the AMAP community.¡±
 
Fleet Audits found it will cost an employee driving a two-year-old lower medium petrol engined car (eg Ford Focus/Vauxhall Astra/Peugeot 307) about 25-27 pence per mile to run their car over a typical cycle of three-year/45,000 miles - including 18,000 business miles - taking all costs into account. These include depreciation, funding, fuel, insurance, maintenance and Vehicle Excise Duty.
 
Move to the upper medium diesel sector (Ford Mondeo/Vauxhall Vectra/Renault Laguna) and the cost of driving a five-year-old car 30,000 miles over three years - 9,000 miles business miles - is 31-33 pence per mile.
 
And, even for the owner of a new petrol-engined small car (Ford Ka, Vauxhall Corsa/Renault Clio/Peugeot 208) clocking up 45,000 miles a year over three years - including 18,000 business miles - the cost will be in the range 20-22 pence per mile.
 
¡°Our analyses,¡± said Mr. Whyte, ¡°which have been passed to HM Revenue & Customs, are designed to project typical average performance of ordinary cars from ordinary people, living in a hugely variable market.¡± He added: ¡°Employees must remember that the more business mileage they undertake in their own cars the cost per mile actually reduces. This is because most vehicles costs - insurance, VED, maintenance and funding are fixed irrespective of the mileage driven. It is only fuel that is truly linear with increasing mileage.
(www.fleet-audits.com)
 

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