BIK Fuel is a great benefit – if you and the driver like jointly paying £2 or more for the same litre of diesel. Not surprisingly, many drivers now want to be free of this punishing ‘perk’.
The good news is that, as long as companies pay attention to the factors below, BIK Fuel can be withdrawn in a way which makes everyone a winner.
1. Understand each driver’s business/private mileage split. This defines whether they should be bought out of BIK Fuel or opt out of it completely (the company makes a saving either way).
2. Understand the true total cost of the benefit. Not just the cost of fuel but also what the employee pays in tax and what the company pays in Class 1A NIC.
3. Communicate, communicate, communicate with the drivers. Done correctly, a withdrawal programme has no downside for the drivers. But employees may not see it that way unless the change is carefully explained to them.
4. Make sure you are absolutely compliant with HMRC. Once your drivers are off ‘free fuel’, you’ll need a robust system in place for recording mileages and handling reimbursements when drivers need to pay back the cost of private fuel.
A withdrawal programme can be carried out in around six months, which includes implementing mileage capture.
Withdrawing BIK Fuel via a TMC managed programme saved a 350-car fleet £440,000 a year.
Read how Lyreco benefited from withdrawing their BIK fuel scheme.