In this final post on New Year’s resolutions for fleet managers we will be addressing BIK fuel and how you could save a lot of money if this benefit was strategically withdrawn.
(catch up on part 1 and part 2)
Resolution three: Why not strategically remove the provision of free fuel as an employee benefit?
If you are paying for your employees’ private fuel then there are some significant savings that you can make.
With BIK fuel, you have to pay for the fuel in the first place, then the driver pays high Benefit In Kind tax on it and then you pay 13.2% Class 1A National Insurance Contributions on the driver’s tax.
Unless the employee has very high private mileage, the only winner is usually the Treasury. This is because they will normally be paying more in BIK tax than they would if they just paid for the fuel outright.
By strategically withdrawing this benefit from your employees both you and your employees could be better off.
How TMC can help
Withdrawing what is often perceived as a popular benefit can be difficult to do as employees may think they are losing out.
The key is to successfully communicate the financial benefits to employees individually as to why they would be better off without it.
This is where TMC come in.
By using our mileage auditing capabilities we are able to consolidate the trip and mileage data on every driver within your organisation then reconcile it against the BIK tax calculations in order to calculate whether employees would be better off paying for fuel outright instead of paying high BIK tax. This is converted into a tailored statement for each employee.
Obviously, the data then enables you to present a compelling case which will result in an overall saving to both the business and your employees.
Managing costs is always the no 1 challenge for all commercial fleet managers. But, by following our three resolutions above you will be in a position to significantly drive down your costs in 2016.