Are you a company car driver? You won't want to skip this. Here's why knowing about advisory fuel rates could help keep costs down
If you run a hybrid or plug-in hybrid car as your company vehicle, HMRC regards it as either petrol or diesel where AFRs are concerned.It’s fair to expect rates to change again on September 1 when they are reviewed again. These current AFRs use an estimated price of 165.1p per litre for unleaded and 179.9p per litre for diesel, and as everyone is painfully aware, the price at the pumps is already quite a bit more than that.Your employer isn't obliged to pay travel expenses at these rates.
Equally, your company could decide to pay more if it can demonstrate to HMRC that the true cost per mile is higher than the advisory rate. In practice, paying the advisory rate keeps things simple for your employer. Paying above these rates could lead to a business having to pay Class 1A National Insurance, with the excess payment being treated as taxable profit.The rates are reviewed in March, June, September and December each year.
Once HMRC has calculated the average cost of fuel per mile for the different kinds of engine and engine sizes, these are rounded up or down to the nearest whole pence to set the rate.HMRC assumes that the fuel cost per mile on a private journey will be the same as for a business trip. So the same rates apply if you need to repay the cost of fuel your employer has paid for that was used for private mileage.
Your employer could choose to pay for all your fuel, including that used for personal journeys. But this is a whole different topic.In that case, different rates apply. These approved mileage rates are higher than those that company car drivers can claim, because they reflect other running costs as well as fuel.
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