Mike Waters' Blog: 25 May 2010 - Don't leave employees out of pocket
25 May 2010
Mike Waters is head of market analysis at Arval
The increasing cost of fuel has led to much debate recently about the HMRC's advisory fuel rates (AFR) and whether they are sufficient to cover the cost of company car drivers' business fuel. In fact some fleets are saying that they are now paying over the AFR because the current rates aren't high enough to fairly reimburse their drivers.
With rates due to be reviewed on 1 June, it will be interesting to see whether the HMRC will put Advisory Fuel Rates up. The difficulty is that in doing so, the HMRC has to anticipate what will happen to fuel prices in the next six months and we all know how volatile pump prices are. If the rates are only reviewed twice a year then they can't recompense employees exactly for the amount they spend on fuel.
To be fair, that's why they are called advisory rates, the HMRC does state that companies can reimburse drivers for business fuel above the AFR if they can prove the rates aren't high enough to adequately reimburse drivers. However, to do this the company must keep evidence of their vehicles' fuel consumption and fuel prices to prove that their payment are reasonable.
In my eyes the only way to guarantee that neither the employee or the employer is out of pocket is to provide employees with a fuel card. This benefits the employee because they won't have to use their own money to purchase and reclaim fuel and the company can make sure it is reimbursing the employee for the exact cost of fuel they buy.
This also means that the company can see at a glance exactly how much fuel each driver is using, how much it cost and where they bought it, enabling them to take much more control of their fuel costs and deliver the employee a valued benefit at the same time.
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