THE PRICE of fuel means the Advisory Fuel Rates are not recompensing company car drivers for the fuel they use. This report by Association of Car Fleet Operators secretary, Stewart Whyte.COMPANY car drivers are increasingly reluctant to undertake business travel because, with petrol prices at record levels, many are effectively subsidising their employer for every mile covered.
Members have been contacting us, concerned at the increasing disparity between the HM Revenue & Customs (HMRC) schedule of Advisory Fuel Rates (AFRs) and the current forecourt prices of the mainstream fuels.
The current AFRs (click here to see table) were last revised in December 2009 when a litre of unleaded petrol cost 108.7p and a litre of diesel cost 109.9p.
Today a litre of unleaded petrol has rocketed to an all-time high of 120.3p a litre on average with a litre of diesel costing an average 121.1p, according to comparison website www.petrolprices.com.
AFRs apply where employers reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel. They provide a range of rates based on engine size and fuel type and when used, are deemed to be tax-free.
Currently HMRC reviews rates twice a year with any changes taking effect on June 1 and December 1. However, HMRC also says it will consider changing the rates if fuel prices fluctuate by 5% from the published rates when each review is made and it considers the price change will be sustained.
However, despite a litre of petrol now being 11.6p (10.7%) more expensive than when AFRs were reviewed last year and a litre of diesel being 11.2p (10.2% more expensive – significantly above the 5% figures) ACFO has been told that HMRC has no plans to change rates ahead of the scheduled half-year review.
On behalf of all our ACFO members we will continue to press for a more responsive position on fuel reimbursement systems. We recognise the benefits of infrequent rate changes from the administrative point of view, but this has to be balanced against fairness and good practice for employee treatment.
Further information
There is additional commentary on this issue in the Editor’s Blog Advisory Fuel Rates: why they are increasingly unfair.
