Speaking at the CIPD Reward Forum, Chris Bolan a consultant at Compass Reward Consulting advised employers to do a cost-benefit analysis on fuel for private use. “Fuel for private use is very tax inefficient,” he said, although many organisations still offer it.
He is also seeing increasing numbers of employers considering company car salary sacrifice. “This is good for staff with low mileage and low CO2 emissions on their cars.”
Offering cars as a salary sacrifice voluntary benefit means that the employer funds the car through a leasing arrangement.
His third piece of advice was to employers who currently pay staff a cash sum instead of using authorised mileage allowance payments (Amaps) to cover business mileage. In the March 2008 Budget it was confirmed that Amaps would not be changed for the foreseeable future.
By not using Amaps employers loose the tax savings. Bolan said: “If you use the Amap system then the employee gets the tax relief a month after the mileage is chalked up and the employer makes an NIC saving.”
In contrast, if employers use the lump sum option, then the employee has to make a claim in their annual tax return.
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