23
May

New advisory fuel rates published

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel.

HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.

Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept there’s no fuel benefit charge. The advisory rates are not binding if you the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile.

The latest advisory fuel rates become effective on 1 June 2018. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.

The rates are as follows:

Engine size Petrol – amount per mile      LPG – amount per mile
1400cc or less  11p 7p
1401cc to 2000cc  14p 9p
Over 2000cc  22p 14p

      

Engine size  Diesel – amount per mile
1600cc or smaller  10p
1601cc to 2000cc  11p
Over 2000cc  13p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

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Company van use – the tax consequences

There are a number of tax consequences to be aware when employees are provided with company vans and fuel. A company van can be defined as a van made available to an employee by reason of their employment. There is usually nothing to report to HMRC if the van is used solely for business journeys, as a pool van or for vans provided as part of a salary sacrifice arrangement. If the van is not exempt then employers must report the cost on form P11D and pay Class 1A National Insurance on the value of the benefit.

Where the private use of a company van is ‘insignificant’, no tax is payable. The definition of insignificant is quite rigid and only applies where private use is exceptional, intermittent, irregular and lasts for short periods of time or happens on odd occasions throughout the year. Examples might include making a detour to drop children to school or using the company van occasionally to take rubbish to the tip.

Where a company van is used for private journeys there is a standard benefit charge for the private use of a company van of

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