New advisory fuel rates published

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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 that 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 which case HMRC will accept there’s no fuel benefit charge. The advisory rates are not binding if the employer can demonstrate that the 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 September 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   12p 7p
1401cc to 2000cc   15p 9p
Over 2000cc   22p 13p

 

Engine size   Diesel – amount per mile
1600cc or smaller   10p
1601cc to 2000cc   12p
Over 2000cc   13p

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

Advisory Electricity Rate

HMRC now accepts that if you pay up to 4p per mile when reimbursing your employees for business travel in a fully electric company car, there is no profit. While electricity is not considered a fuel for tax and NICs purposes, the Advisory Electricity Rate will be published quarterly alongside the other advisory fuel rates.

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