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Advisory Fuel Rates – 1 March 2015

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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 SizePetrolDieselLPG
1400cc or less11p9p8p
1400 to 1600cc13p9p10p
1601 to 2000cc13p11p10p
Over 2000cc20p14p14p

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.

Related news

For many years HMRC have been prepared to accept “trivial” benefits were not taxable. However, what is “trivial” is up for debate…

View article about Small Gifts/Benefits Provided to Employees

1 December 2014 – fuel only mileage rates for company cars/ reclaim of VAT on private car mileage

View article about Advisory Fuel Rates – 1 December 2014 – apologies for this late post

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