The tax crackdown on company car use means many employees are these days compensated for business miles through the Annual Mileage Allowance Payment.

It pays 40p a mile for the first 10,000 miles, supposedly based on 15p a mile for depreciation and 25p for fuel and all other running costs. After 10,000 miles the rate drops to 25p a mile.

Graeme Forbes, at Glasgow wealth adviser Intelligent Capital, comments: "I hardly speak to anyone these days who has a company car other than sales reps who do intergalactic annual mileages.

He adds: "But how on earth are you supposed to buy a car and be compensated adequately for the annual depreciation out of the 10,000 miles times 15p (£1500) and to fuel, tax, insure, service and provide tyres with the other 10,000 times 25p (£2500)?"

Fuel costs alone have slashed the value of the allowance, which has been unchanged for over 10 years and, according to Forbes, "bears absolutely no relation to the real costs associated with traveling those miles in the pursuit of your employment". He adds: "Even with the smallest, greenest car you would struggle to make ends meet with these levels of compensation."

If an employee does have a company car, but does not have a fuel allowance, the reimbursement for business miles has recently increased from 9p per mile to 12p per mile.