New Advisory Fuel Rates from 1 March 2011

HMRC have updated their advisory fuel rates (AFRs). Effective from the 1 March 2011 they expect employers to use these revised rates to reimburse the cost of fuel used in company cars for journeys taken from 1 March 2011.

The AFRs can also be used to calculate the amount an employee should reimburse his employer in respect of road fuel paid for by the employer, which is used for private journeys.
 
The new AFRs, with the old mileage rates in brackets are:

Engine size               Petrol           Diesel        LPG
1400cc or less         14p (13p)      13p(12p)    10p (9p)
1401cc to 2000cc    16p (15p)      13p(12p)    12p (10p)
Over 2000cc             23p (21p)     16p(15p)    17p (15p)
 
These rates are supposed to be used only to reimburse the cost of business related journeys. If the employer reimburses the cost of all fuel in a company car this will inevitably include the cost of fuel for private journeys, which creates a taxable benefit and potential VAT problems.
 
Advisory fuel rates from 1 March 2011
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm