Company Car Tax Guide

Advisory Fuel Rates for Company Cars from 1 March 2011

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 Diesel LPG
1400cc or less 14p 13p 10p
1401cc to 2000cc 16p 13p 12p
Over 2000cc 23p 16p 17p

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 47.36 42.6

128.9

586.1 13.7 14
Petrol 1400 – 2000 40.21 36.2 128.9 586.1 16.2 16
Petrol over 2000 28.22 25.4 128.9 586.1 23.1 23
 
Diesel up to 2000 53.85 48.5 134.0 609.4 12.6 13
Diesel Over 2000 41.45 37.3 134.0 609.4 16.3 16
 
LPG up to 1400 37.4 33.6 45.5 206.9 6.2 6
LPG 1400 – 2000 30.8 27.7 45.5 206.9 7.5 7
LPG over 2000 22.3 20.1 45.5 206.9 10.3 10

Notes:

  1. Mean mpg – miles per gallon – from manufacturers information, weighted by annual sales to businesses (Fleet Audits, 2009).
  2. Applied mpg – adjusted downwards by 10% 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 (21/02/2011), LPG (UK Average) from AA website (February 2011) .

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

The rates are reviewed twice a year. Any changes will take effect on 1 June and 1 December and will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.

HMRC will also consider changing the rates if fuel prices fluctuate by 5% from the published rates when each review is made and they will consider the price change will be sustained.

Employers should make themselves aware of any changes by referring to this page in late May 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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