Quids and Quills

accountancy for authors

Company cars – latest advisory fuel rates

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Rates applying from 1 September 2015cars

HMRC has announced the new advisory fuel rates that apply from 1 September 2015. These are the rates employers can use to reimburse employees who pay to put petrol in their company cars when using them for business.

Most of the rates have gone down by 1p per mile; the exceptions are the petrol and LPG rates for cars with engine size more than 1400cc, which have stayed the same.

The new rates (amounts per mile) are:

Engine size Petrol LPG
1400cc or less 11p 7p
1401cc to 2000cc 14p 9p
Over 2000cc 21p 14p

 

Engine size Diesel
1600cc or less 9p
1601cc to 2000cc 11p
Over 2000cc 13p

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

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. They can be used by employers who:

  • reimburse employees for business travel in their company cars, or
  • require employees to repay the cost of fuel used for private travel.

Using the rates means there is no charge to either income tax or NIC on the amounts paid to employees. It is possible to use them to negotiate dispensations for mileage payments for business travel in company cars.

The new rates apply to all journeys undertaken on or after 1 June 2015 until further notice – though rates are usually updated quarterly. For one month from the date of change, employers may use either the previous or the current rates.

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