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John M Taylor & Co | Accountants Paisley/Taxation/Vat Returns/Business Start Ups/Sage/Payroll/Bookkeeping

Updated Advisory Fuel Rates for Company Cars

New company car advisory fuel rates have been published to take effect from 1 June 2011. HMRC’s website states:

‘These rates apply to all journeys on or after 1 June 2011 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 June 2011 for cars fueled by petrol or LPG are:

Engine Size            Petrol        LPG                      

1400cc or less        15p          11p

1401cc - 2000cc     18p          13p

Over 2000cc           26p          18p

The advisory fuel rates for journeys undertaken on or after 1 June 2011 for cars fueled by diesel are:

Engine Size            Diesel

1600cc or less        12p          

1601cc - 2000cc     15p         

Over 2000cc           18p         

Please note that not all of the rates have been increased, so care must be taken to apply the correct rate. The rate for diesel cars up to 2000cc was previously set at 13p per mile from 1 March 2011. This band has now been split into two, 1600cc or less, and 1601cc - 2000cc. The fuel rate payable for diesel cars of 1600cc or less is reduced by 1p per mile from 13p to 12p so please take care when amending the rates payable. 

Other points to be aware of about the advisory fuel rates:

  • Employers do not need a dispensation to use these rates.
  • Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
  • The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

Posted - 08/06/2011

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