New company car advisory fuel rates have been published which took effect from 1 September 2017. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. These rates only apply to employees using a company car.
Advisory fuel rates for journeys undertaken on or after 1 September 2017 are:
| Engine size | Petrol |
|---|---|
| 1400cc or less | 11p |
| 1401cc – 2000cc | 13p |
| Over 2000cc | 21p |
| Engine size | LPG |
|---|---|
| 1400cc or less | 7p |
| 1401cc – 2000cc | 8p |
| Over 2000cc | 13p |
| Engine size | Diesel |
|---|---|
| 1600cc or less | 9p |
| 1601cc – 2000cc | 11p |
| Over 2000cc | 12p |
Who does this apply to?
The guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
Gov.uk Website
The Gov.uk website goes on to say:
Reimburse employees for business travel in their company cars
If you pay a rate per mile for business travel no higher than the Advisory Fuel Rates, for the particular engine size and fuel type, HM Revenue and Customs (HMRC) will accept there is no taxable profit and no Class 1A National Insurance to pay.
You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates.
If you pay rates that are higher than the advisory rates and can’t demonstrate the fuel cost per mile is higher, there is no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you will have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.
Require employees to repay the cost of fuel used for private travel
If you have correctly recorded all miles of private travel and used the correct rate (or anything higher) to work out the cost of fuel used for private travel that the employee must repay to you, HMRC will accept there is no fuel benefit charge.
The advisory rates will not be binding where you can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR