Changes to the Advisory Fuel Rates from 1 December 2009
To reflect the increase in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 December, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.
The advisory fuel rates may be used for journeys undertaken on or after 1 December 2009.
Engine size |
Petrol |
Diesel |
LPG |
1400cc or less |
11p (10p) |
11p (10p) |
7p (7p) |
1401cc - 2000cc |
14p (12p) |
11p (10p) |
8p (8p) |
Over 2000cc |
20p (18p) |
14p (13p) |
12p (12p) |
HMRC have in the past given employers a month's notice of changes to these rates. However, according to the HMRC guidance:
"After discussions with the relevant trade bodies, the month's notice previously given has been withdrawn for this change. Employers are not obliged to reimburse their employees for business fuel at these rates as long as they do not exceed them overall. Employers making or collecting payments at the superseded rate because they have not been able to change their systems in time may use their judgement on whether to make or require a second payment in respect of the same period in order to apply the new rate from its effective date. However, employers should note that under the normal rules, employees are only able to avoid the car fuel benefit charge if the amount they repay in respect of private fuel at least equals the amounts based on the rates as published."
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
To find out more about how we can help you, please contact Simon Coles & Co, London Chartered Accountants.
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