News added on 30.11.2015

HMRC LATEST NEWS

Cars

Advisory fuel rates reduced for some petrol and LPG cars

HMRC has revised the mileage rates for company car drivers for journeys made on or after 1 December 2015. What's to know?

Company car fuel. With the cost of petrol falling again, HMRC has updated its advisory fuel rates for the next quarter starting on 1 December 2015. To recap, these HMRC-approved mileage rates can be used: (1) by employers to reimburse employees for business travel in their company cars; and (2) where employees reimburse the cost of fuel used for private travel in a company car. Using these advisory mileage rates will mean that there is no benefit in kind on fuel.

New rates. Sub-1,400cc petrol rates remain the same, but they have decreased by 1p per mile for both 1,401cc to 2,000cc and over 2,000cc engines. All diesel bands remain unchanged. LPG rates also remain unchanged apart from engines over 2,000cc which fall by 1p per mile.

Tip 1. The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer-provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC.

Tip 2. These rates can also apply for VAT purposes, but employers can only reclaim input VAT if the employee supplies a receipt.

New advisory fuel rates apply from 1 December 2015. Using these rates to reimburse employees for business mileage in a company car will mean there’s no additional tax charge.

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