TAX LATEST: HMRC introduces new advisory fuel rates (July 2007)
04 July 2007
HM Revenue & Customs has announced new advisory fuel rates for company car drivers using their vehicle for work.
From 1 August, most rates per mile rise by between 1p-2p depending on fuel type and engine size. The change has been brought about by the rise in petrol prices since the downward rate adjustment at the beginning of 2007.
The only rates not to rise are LPG figures for sub-1400cc and over 2000cc cars, sticking at 6 and 10 pence per mile respectively.
Despite the rise, the fuel prices used by HMRC are still lower than those drivers are actually paying. According to Arval, diesel currently stands at 97.6 pence per litre compared with the HMRC figure of 97.2, while unleaded is averaging 97.1, 0.5p more than the HMRC's figure for the calculations.
The rates are calculated by taking a mean mpg of cars in each engine size category, adjusted by 10% to allow for lower fuel economy in real-world driving conditions, as opposed to the lab tests that determine claimed economy figures. HMRC then takes petrol and diesel prices from the Department of Trade & Industry, and LPG from the AA. Hybrids are classified as petrol models.