This guide provides comprehensive information on how we calculate journey costs and Suggested Contribution when using Liftshare: The principles, legal implications, and how to determine a fair contribution per passenger.
What is the Suggested Contribution?
The Suggested Contribution is the cost we recommend for each passenger sharing a one-way trip for your journey. When calculating this, we take into account the amount of money the driver would spend on fuel and the fuel efficiency of an average UK car in MPG (Please see our full breakdown below.)
When we display the Suggested Contribution for a journey we default to a journey shared with 1 other person. But you can use the on-screen slider to see how this figure would change the more people the driver shares with, up to 3 passengers. As a comparison, on the left of the sliding scale, we also display the full amount if the driver were travelling alone.
For example: If the cost for your journey from A to B is £12 (one-way), and you are a driver sharing with 2 passengers, you would divide the cost by 3. Each passenger then pays you £4 for a one-way trip. If one passenger is also travelling back with you on the return leg, they will pay £8 in total.
Why is the Suggested Contribution important?
The Suggested Contribution is designed to ensure that the driver’s costs are covered fairly, without making a profit. This is important as overcharging can be viewed as profiting from car-sharing, which could invalidate a driver’s insurance.
It’s essential to note that our Suggested Contribution calculation is merely a guideline. The actual amount a passenger pays should be a mutual decision between the passenger and the driver, and we encourage you to discuss this together.
We do not include maintenance costs in our calculation. If drivers feel they would like to include maintenance costs in their Suggested Contribution, visit UK Public Passenger Vehicles Act 1981 for guidance on fair wear and tear costs. Using this guidance should ensure no profit is made from carpooling and avoid invalidating your insurance.
Legal Implications of paying for shared lifts
- No Profits Allowed:
The main principle is to ensure the driver is not making a profit. Overcharging could be viewed as operating a taxi service without a licence, potentially invalidating the driver’s vehicle insurance. Our Suggested Contribution helps avoid this pitfall. - HM Revenue and Customs (HMRC):
Our calculations align with HMRC’s approved mileage payment allowances, ensuring drivers are not inadvertently earning taxable income.
How we calculate the journey cost and Suggested Contribution
Navigating shared journey costs can be tricky, and at Liftshare, our commitment is to simplify this process. Let’s dive into the elements that make up the Suggested Contribution calculation:
- Fuel Costs:
We use an average fuel price in GBP per litre and combine this with the vehicle’s fuel efficiency (miles per gallon) to determine how much the fuel will cost for the entire journey. - Miles per Gallon (MPG):
Different vehicles have varying fuel efficiencies. Using an average MPG, we assess how much fuel a typical car will consume on the journey. - Journey Length:
The distance of the trip directly affects the total fuel used and, therefore, the total cost.
Note: Our calculations do not currently include maintenance or wear and tear costs. Some drivers may choose to add an allowance for this to reflect real-world depreciation and servicing. To avoid invalidating your insurance, ensure no profit is made from carpooling. Follow the UK Public Passenger Vehicles Act 1981 for guidance on fair wear and tear costs.
Assumptions (as of latest update)
- Fuel Price: £1.39 per litre Source
- Miles per Gallon (MPG): The average UK car drives 38.8 miles to the gallon Source
- Running & Maintenance Costs: Currently set to £0.00 per mile for our base calculation. Some drivers may choose to add these costs themselves.
- Journey Length (one-way): Based on the start and end points of the driver’s one-way journey.
- Journey Type: Our Suggested Contribution is displayed for a single, one-way journey. If you are making a return trip with passengers, you can ask for double the one-way amount.
Remember, these are averages and estimates. Every journey is unique, and so are its costs and variables.
Formula
Cost of Journey (in GBP) = Distance in Miles × Litres per Mile × Fuel Price per Litre
(Since we’re currently not including maintenance and wear and tear in the calculation, running costs are assumed to be £0. If added, the formula would be: Cost of Journey = (Distance × Litres per Mile × Fuel Price per Litre) + (Distance × Running Cost per Mile).)
Step-by-Step Calculation
Convert MPG to Litres per Mile:
1 UK Gallon = 4.54609 Litres
Litres per Mile = 4.54609 Litres per UK Gallon ÷ 38.8 MPG ≈ 0.1171 Litres/Mile
Calculate Fuel Cost per Mile:
Fuel Cost per Mile = Litres per Mile × Fuel Price per Litre
= 0.1171 Litres/Mile × £1.39/Litre
≈ £0.1627 per Mile
Working Example (5-Mile Journey)
- Distance: 5 Miles
- Fuel Usage: 5 Miles × 0.1171 Litres/Mile ≈ 0.5855 Litres
- Fuel Cost:5855 Litres × £1.39/Litre ≈ £0.8139
- Running & Maintenance Costs: 5 Miles × £0.00 = £0.00
Total Estimated Cost for the Journey: £0.8139 (approximately £0.81)
If you were sharing this 5-mile journey with one passenger (2 people total), you’d divide £0.81 by 2. Each person would pay about £0.41 for the journey.
Ultra Low Emission Zone (ULEZ) and Suggested Contribution
What is ULEZ?
The Ultra Low Emission Zone (ULEZ) in London requires vehicles to meet certain emission standards or pay a charge. Introduced to improve air quality, it discourages the use of older, more polluting vehicles.
Does ULEZ Impact Liftshare’s Suggested Contribution?
Currently, we do not include ULEZ charges in our standard calculation. Because it’s region-specific and not universally applicable, we leave it out to keep our costs straightforward. If a journey passes through a ULEZ and incurs a charge, the driver and passengers should discuss whether to share this additional cost.
In Conclusion:
Liftshare’s Suggested Contribution is designed to be fair, transparent, and compliant with UK regulations. It ensures drivers cover their costs without making a profit, maintaining insurance validity and the integrity of carpooling.
Remember that the Suggested Contribution is a suggestion - a starting point for discussion between driver and passenger. By combining transparent calculations with open communication, everyone can enjoy the benefits of car-sharing responsibly.
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Travel Happy!
Your Liftshare Team