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ACFO calls for tax-free mileage rate review

Date: 16 January 2012   |   Author: Jack Carfrae

ACFO has once again called on the Government to review its stance on tax-free mileage rates for UK fleets.

The organisation has previously lobbied officials on the subject of approved mileage allowance payments (AMAP) on a number of occasions, dating back as far as eight years.

Representatives met with HM Treasury and Revenue & Customs delegates to order a "robust analysis" of the current system.

It argues that existing rates for grey fleet drivers are overly generous and are hampering the Government's broader policy of discouraging higher mileages for environmental purposes.

AMAP rates currently stand at 45p per mile for the first 10,000 miles and 25p per mile thereafter. ACFO is keen to see a "system that it less 'broad brush' and significantly more refined than the current one." As an example, it suggested a system with a number of mileage breakpoints starting from 2000 or 4000 miles with rates reducing on a sliding scale.

ACFO chairman Julie Jenner said: "The current AMAP structure was established almost a decade ago and since then the only change has been the 5p a mile increase in reimbursement to 45p.

"ACFO has always held the view that the 10,000-mile threshold provides a significant incentive for many employees to drive completely unnecessary distances, because they can generate significant expense claims tax-free. That is even more likely to be the case given today's economic climate with personal and household budgets being squeezed."

ACFO had recent success in its negotiations with HMRC, with changes to the Advisory Fuel Rate paid to company car drivers for fuel used on work business coming into effect last summer.

Heeding calls from the fleet operators' association, HMRC changed the frequency of rate reviews and the method used to calculate them, switching to a quarterly schedule, using manufacturers' mpg figures minus 15% rather than 10% for a more real-world conclusion, and adding an additional third band for diesel models.