Should I continue to provide free fuel for my employees?

The financial implications of providing free fuel for staff

MOST of my company car drivers receive free private fuel. It seems very unfair to encourage them to give up this benefit when fuel prices are so uncertain. What do you recommend?

David Rawlings, car tax and SME specialist at BCF Wessex, provides the answer on how to organise a small fleet more effectively.

I totally agree that uncertain fuel prices are a cause for concern. I can understand why some of your employees may think holding onto the benefit is a wise move, but what about your position as an employer?

Let’s assume that one of your employees drives a fairly standard diesel powered company car with CO₂ emissions of 122 g/km, and fuel consumption of 50mpg.

The driver thinks he should keep the benefit of private fuel because he drives about 1,000 private miles a month. His fuel benefit charge will be £1,354 (18,800 x 18% x 40%). This represents a saving of £173 compared to buying the fuel himself, which would cost £1,527, assuming a cost of fuel per litre of £1.40.

However, what does it cost you to provide the fuel?

Annual cost of fuel £1,527 Less VAT recovered £255 Plus VAT scale charge £158 Class 1A NIC on benefit £467 Total £1,897

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