The first step towards improved fuel efficiency is building a better understanding of the current situation. Telematics and various software products can make the process easier, but it’s possible to achieve results through odometer (mileage) readings and fuel card data, especially for small- or medium-sized fleets.
Collecting fuel data
You need to put a process in place to capture the miles driven and fuel use, ideally for every individual or vehicle.
Every time a vehicle is refuelled, you should collect the following data:
- refuelling date
- vehicle identifier, such as the vehicle registration number
- driver name
- litres of fuel drawn
- mileage since last refill (record the current odometer (mileage) reading and subtract previous data)
You should record mileage when any vehicle refuels, regardless of whether it has a tracker. You can ask employees to do this as part of their objectives.
Use the MPG monitoring template spreadsheet as a starting point for recording and processing this data.
To be able to make comparisons, it’s useful to know both total fuel usage and miles per gallon (MPG). It’s also best practice to create a list of the manufacturer’s MPG for every vehicle and measure drivers against this benchmark. This will also help to create more accurate future whole-life cost projections.
Fuel cards for company car drivers
Best practice is to provide all company car and van drivers with fuel cards, as this makes data collection easier. Private fuel costs should be recovered; see our best practice guide on Fuel cards: a guide for fleet managers for more information.
If drivers use fuel cards when refuelling, all of the required data will be available from the fuel card supplier, provided that:
- Employees provide accurate mileage information to cashiers when refuelling.
- Accurate vehicle information is recorded, ie fuel cards are used for the correct vehicle and the cashier inputs the correct values.
Company car and van drivers should declare their business and private mileage every month. The employer then deducts the cost of the private mileage from the employee’s salary, based on a cost per mile calculated from their actual fuel consumption (MPG) and the cost of fuel purchased. To encourage employees to declare their private mileage, you could assume that all costs are for private mileage if the employee does not make a declaration.
The benefits of this system are:
- Both the driver and the employer benefit from choosing fuel-efficient cars.
- It rewards fuel-efficient driving, benefiting both the company and driver.
- It encourages the employee to buy low cost fuel, eg from supermarkets (subject to fuel card permissions).
- VAT savings are based on the actual fuel used for business purposes, which will usually result in additional savings.
- It’s still possible to make savings if free private fuel is provided, although we recommend moving away from this policy generally, due to its cost to both sides.
If a fleet decides not to implement this system, it should adopt HMRC advisory fuel rates (AFRs).