News added on 30.11.2016

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Fuel

New advisory fuel rates

HMRC has updated its advisory fuel rates with effect from 1 December 2016. What are the changes?

Reimbursement. The advisory fuel rate (AFR) is mainly of use in two situations. Firstly, where an employee personally pays for fuel used in their company car or van and claims reimbursement from their employer for business mileage. Secondly, where the business pays for all fuel, e.g. via a company fuel card or account at a petrol station, and requires the employee to reimburse it for the cost of their non-business mileage.

No tax or NI for employee. Using the AFR means a company doesn't need to work out the actual cost of fuel per mile for each of its company vehicles. It can reimburse their employees safe in the knowledge that HMRC will accept that the payment doesn't trigger a benefit-in-kind charge.

New rates. The table below shows the new rates that apply from 1 December 2016 with the previous rate in brackets where there is a change. Note that petrol hybrid cars are treated as petrol cars for this purpose.

 

Engine size

Petrol

LPG

1,400cc or less

11p

7p

1,401cc to 2,000cc

14p (13p)

9p

Over 2,000cc

21p (20p)

13p

 

Engine size

Diesel

1,600cc or less

9p

1,601cc to 2,000cc

11p

Over 2,000cc

13p

The new advisory fuel rates apply from 1 December 2016. The rate changes only affect petrol cars with engine sizes over 1,400cc.

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