THE volatile nature of fuel costs has persuaded H M Revenue & Customs (HMRC) to update its advisory fuel rates (AFR) for business mileage undertaken in company cars on a quarterly basis. Previously, the advisory fuel dates had only been changed every six months.
The change in quarterly fuel rates for company cars began on 01 June 2011. HMRC says that the AFRs will change on 01 March, 01 June, 01 September and 01 December.
In addition to the quarterly change, the diesel engine bands are different to those for petrol engined or LPG fuelled company cars.
The AFRs can be used either for paying the fuel cost incurred on business mileage in a company car, or reclaiming the private mileage in a company car where a business provides company paid fuel.
Using the new advisory fuel rates
Firms can use the advisory fuel rates to reimburse staff for the cost of fuel used on business purposes in their company car.
By using the advisory fuel rates, there is no tax or National Insurance liability.
However the new AFR rates are ‘advisory’. You can use a higher figure without paying tax or National Insurance, but only if you can demonstrate to the taxman that the actual cost was higher.
If your company car is a hybrid, use the petrol figures.
Advisory Fuel Rates from 01 December 2011 for petrol and LPG cars
Engine size 1400cc or less: 15p (petrol); 10p (LPG) 1401cc to 2000cc: 18p (petrol); 12p (LPG) Over 2000cc: 26p (petrol); 18p (LPG)
Advisory Fuel Rates from 01 December 2011 for diesel cars
Engine size 1600cc or less: 12p 1601cc to 2000cc: 15p Over 2000cc: 18p
These advisory fuel rates replace the rates that were available for use from the beginning of September 2011. For reference, the former advisory fuel rates were:
Advisory Fuel Rates from 01 September 2011 for petrol and LPG cars
Engine size 1400cc or less: 15p (petrol); 11p (LPG) 1401cc to 2000cc: 18p (petrol); 12p (LPG) Over 2000cc: 26p (petrol); 18p (LPG)
Advisory Fuel Rates from 01 September 2011 for diesel cars
Engine size
1600cc or less: 12p
1601cc to 2000cc: 15p
Over 2000cc: 18p
- If you want to know how HMRC calculated the new rates, then go to: www.hmrc.gov.uk
Business mileage in private cars
The advisory fuel rates do not apply to business mileage undertaken in private cars – these payments are the Approved Mileage Allowance Payments (AMAPs). From April 2011, these were changed to 45p per mile for the first 10,000 miles; 25p per mile in excess of 10,000 miles.
- Go here for Approved business mileage rates (AMAPs)
Read more on why the company car mileage rates went quarterly
Read the news story Company car drivers to get new Advisory Fuel Rates every quarter.
