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Fuel Economy

Struggling to get a handle on the cost of fuelling your fleet? Here’s all you need to know to max the value of every last drop

Aside from the outlay of acquiring or leasing the car itself, the biggest cost associated with running a company car is fuel. But it’s a manageable cost, and there are a variety of tactics that can have a real impact on your outlay at the pumps. Without doing anything radical, you can improve your company’s operational effectiveness. Simple steps include a refuelling policy to make sure drivers don’t fill up at motorway service stations, instead planning to stop at cheaper sites. Other tactics could include driver training, in-car tracking to monitor driver behaviour and speed limiters, as there is an exponential rise in fuel use versus increased speed – a limiter set at 70mph or lower can bring impressive results.

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Fortunately, Government policy is quite useful on this one, as the current taxation-based drive by Whitehall to encourage companies to run lower-CO2 cars equates with efficiency, as there’s a link between emissions and fuel economy. Aside from the various taxation benefits, simply choosing the most efficient car that’s suitable for the job can make a substantial difference to fuel spend over the working life of a vehicle. Official fuel economy figures of 70 or even 80mpg are now available on hatchbacks perfectly capable of undertaking most company-related tasks, especially those with high-mileage needs.

Then there’s the newer hybrid or plug-in electric technology that can be beneficial to certain tasks, especially urban-based usage. Lower mileage users are likely to find the latest smaller capacity petrol engines make more sense as they’re cheaper than diesels to buy with a fuel saving of around 8p per litre.


There are two sets of figures attached to the amount a driver can reclaim for company mileage, depending on whether they are using their own vehicle or a company car.

For drivers provided with a company vehicle, HM Revenue and Customs sets out nine different bands from 9p-24p per mile depending on engine size and the type of fuel used – petrol, diesel or LPG. This is reviewed every three months to allow for fluctuating fuel prices, and is called the Advisory Fuel Rate. The latest rates can be found at www.hmrc. gov.uk/cars/advisory_fuel_current

For drivers who use their own vehicles for work, the Approved Mileage Allowance Payment (AMAP) is the Government-advised rate of reimbursement. Last revised in 2011, it allows drivers to reclaim 45p per mile from their employer for the first 10,000 business miles per tax year, dropping to 25p per mile after that. See www.hmrc.gov.uk/rates/ travel for the latest on AMAP rates.


An old adage reigns supreme here – if you can’t measure it then you can’t manage it. The best way of recording mileage is to use a fuel card, which means you have a record of every fill, giving both the price paid per litre by the driver and the fuel economy, as they are required to give the vehicle mileage at point of payment. Some companies have taken to incentivising either fuel economy or even pump price, and a small reward for those performing best can mean a big cost saving for a company across its entire fleet, depending on its size.


Some companies still offer payment of employee’s private fuel as a benefit, but this is something the Government has been trying to discourage by ramping up the benefit-in-kind taxation.

HMRC sets out a value of private fuel of £21,700 in the current 2014-15 period. The employee’s tax payment is calculated in the same way as the company car benefit-inkind, using the CO2 emissions figure to set a percentage of the £21,700 that employees will lose from their pay packet.

This means even a lower-rate tax payer with an efficient car will have to use a couple of thousand pounds worth of private fuel to make it pay. The HMRC website has a calculator that shows the exact payments involved to help work out if private fuel is a benefit worth having.

In reality private fuel is rarely worthwhile for individuals, and the Government plans to further disincentivise it in the future. See www.hmrc.gov.uk/payerti/ exb/a-z/c/cars-fuel-value