Taxation Issues Company Cars and Taxation

Track-back: Manager | Taxation Issues | Benefit In Kind

Company Cars - Advisory Fuel Rates from 1 July 2008

HM Revenue and Customs

These figures give about one month’s notice of the changes and apply to all journeys on or after 1 July 2008 until further notice.

We have agreed with employers that we should give them one month's notice of a change in advisory fuel rates so that they can amend their systems in good time to implement the new rates. Accordingly we are announcing these new rates in time for implementation on 1 July. However, the recent fuel price increases which justify these AFR changes have happened very rapidly. In these unusual circumstances we are mindful that an implementation date of 1 July might mean that drivers will be incurring higher fuel prices before the new rates become effective. Consequently, where employers are able to do so, HMRC is content for the new rates to be implemented immediately ie from 1 June.

Petrol hybrid cars are treated as petrol cars for this purpose.

These rates are calculated from the fuel prices in the tables below:

Notes:

1. Mean mpg - miles per gallon - from manufacturers information, weighted by annual sales to businesses (Fleet Audits, 2006).

2. Applied mpg - adjusted downwards by 10 per cent to take account of real driving conditions and lower fuel economy for older cars.

3. For LPG, mpg is assumed to be 20 per cent lower than for petrol due to lower volumetric energy density.

4. Department for Business, Enterprise & Regulatory Reform's latest petrol and diesel prices (26 May 2008), LPG from AA website (May 2008).

Will the rate per mile figures change if fuel prices go up or down?

With effect from the January 2008 change, the rates will be reviewed twice a year. Any changes will take effect on 1 January and 1 July but will be published on the HMRC website about one month in advance.

HMRC will also consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates when each review is made and we consider the price change will be sustained.

Employers should make themselves aware of any changes by referring to this page http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm in June and December each year. It is the primary source of information.

^ back to top

All of the documents can be obtained from us in a word format, so that they can be personalised and edited to suit your company or business. This service is free of charge, on request or phone 01908 262662.