New advisory fuel rates from 1 June 2011

New advisory fuel rates from 1 June 2011
Tuesday, 31 May 2011 16:25

HMRC have updated their advisory fuel rates (AFRs). Effective from the 1 June 2011 they expect employers to use these revised rates to reimburse the cost of fuel used in company cars for journeys taken from 1 June 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         15p(14p)      12p(12p)    11p (10p)
1401cc to 2000cc    18p(16p)      15p(13p)    13p (12p)
Over 2000cc             26p(23p)      18p(16p)    18p (17p)

Engine size              Diesel
1600cc or less        12p(12p)
1601cc to 2000cc    15p(13p)
Over 2000cc             18p(16p)

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 June 2011

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