The advisory fuel rates are reviewed by HMRC every quarter, with the new rates taking effect from the first of June, September, December and March. In view of the recent increases in the price of road fuel you would expect the all the advisory fuel rates to rise, but they haven’t.
The rates for all petrol vehicles have been held at the levels set from 1 March 2018, but the rates for LPG vehicles have increased for engines of 1400cc or more. The rate for diesel vehicles with engine sizes of 1600cc or less has also increased from 9p to 10p per mile.
These rates are only advisory, HMRC can’t require an employer to use them. If the employees incur higher fuel costs, perhaps due to prices in their local area, or low fuel efficiency of the vehicles, the employer can use its own rates based on the actual fuel costs of its company vehicles. Remember these rates should only be used for reimbursing drivers of company cars, when the employee has paid for the fuel used on a business journey.
When an employee uses their own vehicle for a business journey the employer can pay mileage rates of 45p per mile for any size of car for the first 10,000 business miles driven in a year, and 25p per mile for subsequent journeys. These rates haven’t changed since 2011.
Written by the Tax Advice