HMRC has published revised advisory fuel rates for company cars, applying from 1 September 2016. The rates are to be used only where employers either reimburse employees for business travel in their company cars, or require employees to repay the cost of fuel used for private travel.
These rates apply from 1 December 2016. You can use the previous rates for up to one month from the date the new rates apply.
|Engine size||Petrol – amount per mile||LPG – amount per mile|
|1400cc or less||11p||7p|
|1404cc to 2000cc||14p||9p|
|1600cc or less||9p|
|1601cc to 2000cc||11p|
Hybrid cars are treated as either petrol or diesel cars for this purpose.
HM Revenue and Customs review rates quarterly on 1 March, 1 June, 1 September and 1 December.
When you can use the rates
The rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel
Reimburse employees for business travel in their company cars
If you pay a rate per mile for business travel no higher than the advisory fuel rate, for the particular engine size and fuel type, HM Revenue and Customs (HMRC) will accept there is no taxable profit and no Class 1A National Insurance to pay.
You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates.
If you pay rates that are higher than the advisory rates and cannot demonstrate the fuel cost per mile is higher, there is no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you will have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.
Require employees to repay the cost of fuel used for private travel
If you have correctly recorded all miles of private travel and used the correct rate (or anything higher) to work out the cost of fuel used for private travel that the employee must repay to you, HMRC will accept there is no fuel benefit charge.
The advisory rates will not be binding where you can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.