Company Car Tax Guide

Advisory Fuel Rates for Company Cars from 1 June 2012

These rates apply to all journeys on or after 1 March 2011 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

Engine Size Petrol LPG
1400cc or less 15p 11p
1401cc to 2000cc 18p 13p
Over 2000cc 26p 19p

 

Engine Size Diesel
1600cc or less 12p
1601cc to 2000cc 15p
Over 2000cc 18p

Petrol hybrid cars are treated as petrol cars for this purpose.

Where employers have practical difficulties implementing the new lower rates they can continue to use the older higher rates for a further month, i.e. to 28 February 2011, without having to take account of the income tax, NIC and VAT implications of paying allowances at the higher rate. This will allow time for drivers and employers to adjust to the new rate.

This treatment will extend to those employers with dispensations for fuel rates which are linked, usually by a formula, to AFRs.

Employers can however use the new lower rate with effect from 1 February for employees with fuel cards who reimburse their employers for private fuel bought with a company fuel card.

These rates are calculated from the fuel prices in the table below:

Fuel Engine Size
(cc)
Mean
MPG
Applied
MPG
Fuel price
(per litre)
Fuel price
(per gallon)
Pence
per mile
AFR
 
Petrol up to 1400 48.1 40.9

135.8

617.2 15.1 15
Petrol 1400 – 2000 40.7 34.6 135.8 617.2 17.8 18
Petrol over 2000 27.8 23.7 135.8 617.2 26.1 26
 
Diesel up to 1600 61.1 51.9 141.7 644.4 12.4 12
Diesel 1601 to 2000 53.85 48.5 141.7 644.4 15.0 15
Diesel Over 2000 41.45 37.3 141.7 644.4 18.4 18
 
LPG up to 1400 38.5 32.7 78.7 357.8 10.9 11
LPG 1400 – 2000 32.6 27.7 78.7 357.8 12.9 13
LPG over 2000 22.3 18.9 78.7 357.8 18.9 19

Notes:

  1. Mean mpg – miles per gallon – from manufacturers information, weighted by annual sales to businesses (Fleet Audits, 2010).
  2. Applied mpg – adjusted downwards by 15% to take account of real driving conditions and lower fuel economy for older cars
  3. For LPG, mpg is assumed to be 20% lower than for petrol due to lower volumetric energy density
  4. Department for Business, Innovation & Skill’s latest petrol and diesel prices (21 May 2012), LPG (UK Average) from AA website (April 2012) .

Will the rate per mile figures change if fuel prices go up or down?

The rates are now to be reviewed four times a year. Any changes will take effect at the beginning of each calendar quarter – on 1 March, 1 June, 1 September and 1 December and will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.

In view of the increased frequency of review, HMRC will no longer consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates.

Employers should make themselves aware of any changes by referring to this page in late February, May, August and November each year. It is the primary source of information.

VAT

Customs will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.

This Company Car Tax Guide – Crown Copyright © 2012

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