Advisory Fuel Rates
HM Revenue & Customs (HMRC) have published the latest revised Advisory Fuel Rates (AFRs) which came into force on 1 June 2019. The new rates are as follows:
|Engine size||Petrol – amount per mile||LPG – amount per mile||Diesel – amount per mile|
|1400cc or less||12 pence||8 pence||10 pence|
|1401cc to 2000cc||15 pence||9 pence||12 pence|
|Over 2000cc||22 pence||14 pence||14 pence|
The fuel rates are calculated based on the current fuel price and adjusted miles per gallon figures, and only apply when either:
- An employee is reimbursed for business mileage undertaken in a company car or,
- Employees are required to reimburse their employer for the cost of fuel used for non-business purposes in a company car.
They should not be used in any other circumstances or in relation to vans.
Hybrid cars are treated as either petrol or diesel cars for the purpose of the fuel rates.
If a rate per mile is paid no higher than the advisory fuel rate, HMRC will accept there is no taxable income and no Class 1A National Insurance is therefore payable.
Fuel rates which better reflect your circumstances may be used if:
- the cars being used are more fuel efficient or,
- if the cost of business travel is higher than the guideline rates.
Full details should be kept on how the fuel rate has been calculated and the basis used to avoid any dispute with HMRC.
Business Travel in a Company Car
If the fuel rates paid to employees are higher than the advisory fuel rates and it cannot be demonstrated that the fuel costs per mile is higher, there will be no fuel benefit in kind if the mileage payments are solely for business travel. However, any excess paid will be treated as earnings liable for class 1 National Insurance for the employee. If rates paid are below the advisory fuel rates, the employee can claim back the difference from HMRC at the end of the tax year.
HMRC will accept there is no fuel benefit in kind if a record has been kept which details all the private mileage completed by an employee and the correct rates have been used to calculate the cost of fuel used by the employee for private travel. This amount must then be reimbursed to the employer.
HMRC review the fuel rates quarterly in March, June, September and December, so new rates are likely to be introduced on 1 September 2019.