Reducing vehicle mileage allowance payments is not the answer to climate change, the Chartered Institute of Personnel and Development has warned.

Proposals by HMRC to link company mileage allowances to CO2 emissions would leave many firms facing extra costs but do nothing for the environment, the organisation claimed.

“All that will happen is that many small and medium-sized employers will face more admin hassle and increased costs, and employees will be penalised for using their car for business,” said Charles Cotton, CIPD pay and benefits adviser.

“If HMRC wishes to encourage the driving of lower-CO2-emission-vehicles then this could be better achieved through other initiatives, such as differentiating bands of vehicle excise duty.”