Employer changing mileage payments to leave people out of pocket, any recourse

Lum

I've had a company car for about 2 1/2 years, so still 1 1/2 years left on the lease. It's a 2.0 Mondeo which I chose mainly for it's carrying capacity as I need to get my partner's wheelchair in the boot from time to time. I had to get rid of my good old Volvo 940 estate in order to make room for this car outside my house. The company do not allow you to use personal cars for business trips.

The original scheme was that they would count how much you had spent on fuel in a month, and count your business and personal miles, so if you spent £100 on fuel and did 100 personal miles and 900 business miles they would deduct £10 from your salary.

They are now moving from this scheme, which they call "actual cost of fuel" to a new scheme "HMRC advisory rates" which are apparently based on numbers calculated by having a middle aged accountant drive a 1.4 diesel Nissan Micra at 55mph on a downhill stretch of motorway with the wind behind them. They reimburse you at this rate for your business miles and if it cost you more than that you get to fund the difference yourself out of your own money.

Understandably everyone is up in arms over this, especially those who are still stuck in up to 4 years of leasing a car that cannot possibly meet this cost per mile. Most people are agreed that if they brought in this scheme for new cars only and people choosing a new car were actually offered a car capable of meeting the new rates (most low grade employees can only have a 1.6 diesel Focus which is not capable of doing this) then the scheme would be acceptable, but as it stands we're basically subsidising all our business travel out of our own wages.

I've had no joy with management on this. My own boss is more annoyed than any of us as he too has a 1.6 Focus (chosen to save on car tax) and does more business miles than the rest of us put together. He hasn't been able to even get a response out of senior management or fleet. The thread on our internal forums is also completely devoid of any managers other than people like my boss.

My question is, is there anything I can do about this, short of making fraudulent inflated mileage claims which obviously I am not willing to do.

I can't even give up the company car because then you have to use hire cars for business trips and these are reimbursed in the same way, only now you have the risk of getting "upgraded" by Enterprise to a 2.0 petrol Vauxhall Insignia which would leave me even more out of pocket.

HappyMJ

So you have to pay http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

2.0L would then be 26p per mile for your own personal mileage. Or...do they pay you 26p for every business mile you do?

The rates seem fair. A company I had been with changed to this. They thought some people had been nicking a few litres from each tank full for use in another car but couldn't prove anything.

To save fuel you should as you say drive at 55mph. If that makes you late then too bad.

Lum

It's 15p a mile for a diesel Mondeo. Bear in mind that I'm based in Wales and the terrain is not ideal for hypermiling.

Some people are indeed doing 55mph everywhere, turning 2 day trips into 3 day trips with increased hotel expenses, but for me that is not an option as I have a disabled partner to care for, meaning every trip I do has to be a 1 day trip.

There is also the safety issue of a 5 hour drive turning into a 7 hour drive if you drop from 70 to 50mph.

I don't do too many business miles so it doesn't affect me too badly, but some of my co-workers, who have Focuses, are getting seriously shafted by this deal, so this is as much about them as it is me.

maninthestreet

The rates seem fair to me. Why are those driving a Ford Focus apparently ' ...getting seriously shafted by this deal' ???

HappyMJ

Lum wrote: »

It's 15p a mile for a diesel Mondeo. Bear in mind that I'm based in Wales and the terrain is not ideal for hypermiling.

Some people are indeed doing 55mph everywhere, turning 2 day trips into 3 day trips with increased hotel expenses, but for me that is not an option as I have a disabled partner to care for, meaning every trip I do has to be a 1 day trip.

There is also the safety issue of a 5 hour drive turning into a 7 hour drive if you drop from 70 to 50mph.

I don't do too many business miles so it doesn't affect me too badly, but some of my co-workers, who have Focuses, are getting seriously shafted by this deal, so this is as much about them as it is me.

You should be stopping every 2 hours to avoid the safety issues.

Anyway, you need to be appealing to management using the same calculations that the HMRC website uses to prove that you cannot meet the fuel costs on a 2.0L diesel Mondeo.

Do you get more or less than the quoted figure of 50MPG?

The cut off points are quite strict so you'll have to take it for the next 18 months. At 5,000 miles a year it will cost you an extra 3p per mile if you can only get 40MPG so an extra £225 over 18 months. Negotiate....

spiro

So you will be paid 15ppm, diesel is about £6.00/gallon (around my way) so you need to achieve better that 40mpg to cover the fuel cost of the business mileage you are doing. Anybody I know who has a company car (not many now) gets paid this way.

maninthestreet

It's the Applied MPG figure that is the important one:

Applied mpg - adjusted downwards by 15 per cent to take account
of real driving conditions and lower fuel economy for older cars.

This is 43.1 mpg for a 2.0L diesel.

Lum

The trip computer on my Mondeo reports 41mpg, however we all know how optimistic they are.

My issue is not that the company is choosing to pay in this way. It is that they are moving the goalposts during the middle of people's leases. Had it been this way from day one, I would have chosen my car differently in order to be able to meet these efficiency requirements. This would likely have involved getting a smaller car, keeping the Volvo and parking the company car somewhere other than outside my house.

marlot

It's a fairly normal way to pay fuel expenses, and for most people will repay about the right amount. I used to get 43mpg out of my Mondeo estate.

You can check on the employment board where you may get different advice, but I suspect there is nothing much you can do about it apart from choose a more economical car next time you're choosing what to lease.

Your other option at the end of the lease is if the company lets you opt out of the company car scheme and have an allowance instead - but this may be even worse

Lum

There is no car allowance scheme or I would have gone for that in the first place!
More tax efficient and I get to drive a car I actually like.

Currently I'm pushing for making me officially home based, in which case I may ask for a business use only car. These have their fuel reimbursed in full still.

maninthestreet

So you get 41MPG - you only need to get 2.1MPG more and you won't be out of pocket - in fact you could easily be better off.