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HMRC Advisory Fuel Rates – rates from 1 December 2015

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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 reviewed and adjusted each quarter 1 March/1 June/1 September/1 December.

The rates from 1 December 2015 are:

Engine SizePetrolDieselLPG
1400cc or less11p9p7p
1400 to 1600cc13p9p9p
1601cc to 2000cc13p11p9p
Over 2000cc10p13p13p

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.

This page of HMRC website always shows current and earlier rates https://www.gov.uk/government/publications/advisory-fuel-rates

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HMRC have recently announced that they have wound down their business record checks and will no longer initiate new checks using this process. HMRC say that they ‘remain committed to helping businesses to keep better records’. At the same time HMRC have updated their factsheet on compliance checks.

View article about HMRC Business Checks to end…. But they can still visit business premises as part of a compliance check

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On Wednesday 25 November the Chancellor George Osborne presented the first Autumn Statement of this Parliament along with the Spending Review.

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