Mileage allowance tops travel-related benefits list: yardstick

Mileage allowance is the most common travel-related benefit offered by employers, according to research by Personnel Today’s sister publication Employment Review.

The survey of 277 organisations showed that a mileage allowance – which covers individual expenses when someone uses either a company car or their own vehicle on business – is paid to some or all of their staff by almost 74% of the respondents.

Of the 105 respondents that provided details on their mileage allowances, 21 said they paid company car users for the miles they travel using guidelines published by HM Revenue and Customs (HMRC). The rates vary according to the size of the engine and the type of fuel. A flat rate for car mileage is paid by 55 of the organisations, with a median payment of 14p a mile, while a fuel card is provided by six organisations.

A car allowance is the second most common travel-related benefit provided by employers, offered by 67.5% of the respondents. However, there were wide variations between the sector in terms of the number offering the benefit, and the amount they pay. The manufacturing sector has the highest median payment at £6,000, while the private sector has a median of £5,500, and the public sector median stands at £1,056.

Among the 126 respondents that provided details of their allowances, the median was found to be £5,312 a year. Many employers stated that the value of the allowance varied depending on the grade of the employee, while others cited the engine size as a defining factor, and others based the payment on a percentage of the employee’s annual salary.

For staff who use their own vehicles for business purposes, the HMRC also provides guidelines on how to calculate the mileage allowance that can be paid free of tax. These rates depend on the type of vehicle, and also the mileage covered.

Of the 182 respondents that provided details on how they calculate the mileage allowance for these employees, 23 said they used the HMRC mileage rates. A flat rate is paid by 124 respondents, of which 59.7% pay 40p a mile. Allowances that vary according to engine size are far less common (eight organsations), as are those calculated from a combination of engine size and mileage (eight organsations.

However, the number of respondents offering a company car scheme fell to 23.8% – a significant reduction on last year’s results, when this benefit was offered by 55.5% of employers. This continues an ongoing downward trend that has seen this benefit provision decline almost every year since 1999.


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