TAX LATEST: HMRC issues new advisory fuel rates (June 2008)
30 May 2008
Author: Tristan Young
Cars running on modern petrol have a lower list price than diesel equivalents
HMRC has revealed new advisory fuel rate figures that reflect the increasing cost of fuel.
|HMRC Advisory Fuel Rates (June-Dec 2008) summary|
|1400cc or less||12p (11p)||13p (11p)||7p (7p)|
|1401cc to 2000cc||15p (13p)||13p (11p)||9p (8p)|
|Over 2000cc||21p (19p)||17p (14p)||13p (11p)|
|Previous figures in brackets|
AFRs cover fuel-only payments for company car drivers on work business.
The rates have risen by up to three pence per mile. Only small engined LPG vehicles see no change in AFR.
HMRC has also announced that the rates will not be subject to the normal one month notice period before coming in.
An HMRC spokesman said: "We are aware that there is some concern in the fleet industry about the level of AFRs and the level of increases are significant, so although HMRC would normally expect to give a month's notice (and will do so for future revisions) on this occasion we will respond to unusual circumstances and agree for employers to apply the new rates during June if they are able and willing to do so. This line will be reflected on the website and in guidance given to staff."
ACFO director Stewart Whyte said: "We welcome these changes in advisory fuel rates. We also appreciate that HMRC has acknowledged the extreme financial pressure on many company car drivers who believe that in recent months they have effectively been subsidising their companies' business mileage.
"Assuming that employers are able to apply the new rates during June, one month earlier than expected, and are willing to do so, the HMRC's concession will go some considerable way towards alleviating the financial hardship that drivers have been feeling. There is still some encouragement in these new rates for employees to drive as economically as possible, but at least the element of subsidising employers has gone."
|HMRC Advisory Fuel Rates (June-Dec 2008)|
|Fuel Type||Engine Size (cc)||MPG*||Applied MPG**,^||Fuel price (per litre)^^||Fuel price (per gallon)||Pence per mile||AFR|
|Petrol||up to 1400||48.9||44.0||114.8||521.8||11.9||12|
|Petrol||1400 - 2000||39.5||35.6||114.8||521.8||14.7||15|
|Diesel||up to 2000||50.7||45.7||127.2||578.3||12.7||13|
|LPG||up to 1400||39.1||35.2||57.1||259.6||7.4||7|
|LPG||1400 - 2000||31.6||28.5||57.1||259.6||9.1||9|
|* Mean miles per gallon, weighted by annual sales to businesses (Fleet Audits, 2006).|
|** Adjusted to take account of real driving conditions and lower fuel economy for older cars.|
|^ For LPG, assume mileage is 20% lower due to lower volumetric energy density.|
|^^ Department for Business, Enterprise & Regulatory Reform 's latest petrol and diesel prices (26th May 2008), and latest available UK average LPG update (May 2008) from AA website.|