Advisory fuel rates for company cars

The latest advisory fuel rates became effective on 1 September 2017. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.

The rates are as follows:

Engine size   Petrol – amount per mile   LPG – amount per mile
1400cc or less     11p 7p
1401cc to 2000cc   13p 8p
Over 2000cc  21p 13p
Engine size  Diesel – amount per mile
1600cc or smaller  9p
1601cc to 2000cc  11p
Over 2000cc  12p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Planning notes:

It is possible to use these rates and apply them to private mileage if employers pay for their employees’ private fuel costs. Employees can then reimburse employers (recorded private mileage x the appropriate rate per mile). In this way the employer will not have to pay Class 1A NICs on the cash benefit of providing the fuel, and the employee will not be taxed on the benefit. In many, but not all cases, this reimbursement will result in overall cash savings for both parties. To be certain, it is wise to make the relevant calculations and we can help.

Posted in HMRC notices

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