[Beatle02]

We as a company give all of our employees a fuel card to purchase both private and business fuel. Then at the end of the month we make a deduction based on the Advisory Fuel Rate for any private miles.
The problem we have, now more employees are choosing hybrids is that they feel they are penalised when driving on the battery for personal use as we are still deducting at petrol/diesel rate per mile.
So I was wondering if anyone else has encountered this and has a solution? Or has implemented a bespoke rate and how that worked?

 

[proddick]

Interesting problem. My suggestion would be to work out fuel costs per mile over the period, rather than use AFR. That will incentivise PHEV drivers to use battery as much as possible to get their mileage rate down and pay you less. AFAIK HMRC should be fine with this, but will need you to keep records.

 

[WithEthyl]

Just thinking out loud, but can't you just reverse the payment process?

So deduct any fuel card costs from your employees monthly salary then add back any claims they make for business mileage at the AFR rate. That way the employee is paid for all their business miles at the correct rate, you get data on how many miles they are doing and the employee is incentivised to maximise the use of electricity and minimise fuel because they get the benefit if they manage their fuel/energy costs below AFR. It also ensures employees enter the mileage data because if they don't, then they don't get reimbursed for the fuel.

When I've had company cars, the driver always recorded and claimed the business mileage at AFR. This also incentivised people to pick fuel efficient cars because if you picked something with poor MPG, you as the employee suffered the hit from fuel costs being over the AFR, with your approach it looks like the company pays for that. The employee could pick a big inefficient car costing 25p/mile in fuel and yet only pay AFR on their private mileage, the cost going to the company. Generous company.

 

[Beatle02]

Just thinking out loud, but can't you just reverse the payment process?

So deduct any fuel card costs from your employees monthly salary then add back any claims they make for business mileage at the AFR rate. That way the employee is paid for all their business miles at the correct rate, you get data on how many miles they are doing and the employee is incentivised to maximise the use of electricity and minimise fuel because they get the benefit if they manage their fuel/energy costs below AFR. It also ensures employees enter the mileage data because if they don't, then they don't get reimbursed for the fuel.

When I've had company cars, the driver always recorded and claimed the business mileage.

Thank you, yes that's been the advice from our mileage capture team as well. It's just that it will be a big change for some to lay out for their business miles, especially for some who cover larger regions so will take some consulting to implement. This may very well be the route we go down though.

 

[Beatle02]

Interesting problem. My suggestion would be to work out fuel costs per mile over the period, rather than use AFR. That will incentivise PHEV drivers to use battery as much as possible to get their mileage rate down and pay you less. AFAIK HMRC should be fine with this, but will need you to keep records.

Definitely something to consider thank you.