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Author: JP / / Latest News

Advisory Fuel Rates – 1 March 2015

1 March 2015 – fuel only mileage rates for company cars/ reclaim of VAT on private car mileage

When an employee is provided with a company car, to avoid a taxable car fuel benefit, fuel must only be provided for business travel.

To ensure this is the case, two methods are available, the first being preferable:

  1. The employee initially pays for all fuel. The employee logs their business miles and makes a claim to the company at the correct rate per mile for these miles.
  2. The company initially pays for all fuel. The employee logs their business & private miles and repays the company at the correct rate per mile for the private miles.

Several years ago HMRC started to issue ‘Advisory Fuel Rates’, which they allow for the above calculations without any proof of the actual fuel cost per mile.

The rates are reviewed and adjusted each quarter: 1 March, 1 June, 1 September and 1 December.

The rates from 1 March 2015 are:

Engine Size Petrol Diesel LPG 
1400cc   or less 11p 9p 8p
1400   to 1600cc 13p 9p 10p
1601   to 2000cc 13p 11p 10p
Over   2000cc 20p 14p 14p

 

Hybrid cars are treated as petrol or diesel as appropriate.

Employers and employees need to revise their calculations accordingly. You are allowed to continue on the previous rates for one month.

Different rates can be used but these have to be specifically agreed with HMRC by providing documentation and calculations to show why the rate you wish to use is sensible.

These rates are also those used for reclaiming VAT on mileage allowances paid to employees for business mileage in their private cars.

To find out more about the advisory fuel rates, and to see current and earlier fuel rates visit the HMRC website.

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