Part of the enormous workload of a fleet manager
, together with health and safety requirements, maintenance, budgeting, organising drivers and so on, is the task of correctly determining the business vs. private mileage use
(assuming the fleet includes company cars that are also used for private purposes).
According to Automotive Fleet data, approximately 87% of fleets do allow personal use of company vehicles, which is often see from an outsider perspective as an added benefit to the wage, but if rules are correctly applied, the personal use of the vehicle should not be taken for granted as “free”, strictly speaking.
Yes, if rules are applied correctly. According to a Fleet News article published around the end of April, a YouGov survey commissioned by ABAX UK disclosed that 56% of company car drivers are unaware of the rules on reclaiming business/private mileage and that 36% of employees entitled to a company car update their mileage log only once a fortnight. The data suggests that mileage recording is not accurate enough and can potentially expose both businesses and drivers to penalisation.
Fleet managers have an added responsibility of protecting the company from tax problems arising from such matters, which could lead to sanctions as well as excessive fuel purchases (two additional fleet costs).
According to Irish tax regulations, private mileage is subject to PAYE (Pay As You Earn) and PRSI (Pay Related Social Insurance), while business mileage is tax free. It is important to underline that travelling to and from work is considered private use of the vehicle and that all employees must record their private and their business trips, in a company vehicle, regularly.
Adding miles inaccurately, as well as stating there has been very little personal use, or not giving notice to the company of the real personal use run up in one of their vehicles, is all extremely risky. There is a minimum private mileage that an employer may accept for the purposes of calculating notional pay (the "cash equivalent" of the private use of the company car, to which PAYE and PRSI must be applied): 5,000 miles per annum. If an employee claims lower personal mileage occurred in the course of a year, he/she has to provide documentation as proof.
Fleet News reported that a UK company inspected by HMRC (Her Majesty's Revenue and Customs) officers revealed inaccurate estimates of private mileage which did not tally with fuel card invoices. The onus is on the company and the drivers, who can both face a heavy fine for even small mileage discrepancies.