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Mileage rates 'should be scrapped'

30/05/07

The mileage payments system for drivers who use their cars for business should be scrapped as fuel prices soar, according to an industry expert.

Emerson Hill Associates, a management consultancy firm, says that although people are paid 40 pence per mile at the moment, they are heavily taxed for any cost above this.

This means that as fuel prices rise, by as much as two pence per litre every week in some areas, business motorists are operating their vehicles at a loss, which may interest customers looking for cheape vehicle insurance.

A representative from the firm also said that the government has a "dogmatic belief" that motorists are making a profit out of running their cars for business but they are actually out of pocket.

Bob Blackman, management consultant with Emerson Hill Associates, said: "We recommend to clients that they side-step car mileage rates and pay a travel allowance which reflects what it actually costs to get about on business. We have researched the costs of travel in a number of areas and find that in most places they exceed 50 pence per mile."

He added that the millions of workers who have to conduct business on behalf of their employer are operating at a loss and are disadvantaged by government "dogma".

Meanwhile, Personnel Today reported earlier this month that the majority of UK companies are moving away from offering company cars and are instead offering cash allowances to employees.

According to a survey by business consultants Watson Wyatt, three in ten firms offer cash instead of a car.

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