Fuel is often a significant component of fleet costs. You may currently provide fuel cards to your drivers and provide fuel for private use. If this is the case, there is often a significant opportunity to reduce costs by removing the provision of free fuel - typically the private fuel element will cost you between £1,000 and £2,000 per driver per year.
Also, providing free fuel may encourage employees to drive more miles, leading to additional depreciation costs.
In many cases, the Benefit-In-Kind (BIK) cost of free fuel provision to the driver will exceed the value received.
Ways to remove free fuel include:
- A well communicated education programme to your drivers that will encourage a significant number to opt out, creating a win/win situation for you and your employees.
- Ensuring free fuel is not offered to new starters.
- Buying out existing employees via a one-off, non-pensionable lump sum payment.
- Setting a future date after which free fuel will no longer be paid.
In each case, you will need to assess the impact on your employees' motivation, relative to the projected savings.
Whether you offer private fuel or not, effective management of fleet CO2 emissions will reduce your fuel bill as well as employers NIC payments and at the same time will help you achieve your environmental objectives.
Fleet costs can also be dramatically reduced by the introduction of video conferencing for meetings - thus reducing the amount of time the vehicles are on the road and hence leading to reduced fuel consumption and improved vehicle depreciation performance.
