The fuel and mileage cost management specialists at the Miles Consultancy (TMC) have said that fleets may gain slightly from using real-world costs to calculate mileage repayments for drivers in company cars rather than the current advisory fuel rates, which have been revised from 1 March 2013.

Although the new AFRS see marginal 1p changes for some diesel and LPG rates whilst petrol rates stay the same, TMC says that its real-world miles per gallon data shows that fleets are losing out by a bit more than 1p per mile, with the AFR rates pitched slightly on the generous side overall at the moment. The company adds that the current rates are most generous to over-2 litre petrol cars, which are up by 4p per mile more than the real-world cost on TMC's database.

TMC adds that actual-cost reimbursement offers further advantages in that it is completely fair to the fleet and the driver, and that all the benefits of reductions in mileage, consumption and CO2 flow directly to the fleet rather than being mediated by the fixed-rate AFRs.

However, the company points out that paying company car drivers the AFR rates instead of using fuel and mileage data to settle fuel expenses offers benefits in that they are straightforward to use, set independently by HMRC, and there is no danger of incurring private fuel BIK by paying too much per mile, although keeping accurate mileage logs is still essential.

In a statement, Paul Jackson, managing director of TMC said: ‘HMRC introduced the AFRs as a convenience for company car fleets. There's almost always a price to pay for convenience, though. It's probably a relatively minor price if you have a small fleet but large-fleet users of the AFRs should review the policy at least annually to make sure they aren't losing out on the cost benefit of lower CO2 emissions.

‘And always remember that if your mileage records are incomplete or inaccurate, you could find yourself in tax trouble even if you use the official rates.’