A. HMRC publishes advisory fuel rates as a guideline for fuel only mileage rates for company cars, depending on engine size and fuel type of the car. Advisory fuel rates are not binding but if an employer pays less than or equal to the rates HMRC will accept that there is no taxable profit and no Class 1A national insurance to pay.
Advisory fuel rates only apply where an employer either:
- reimburses an employee for business travel in their company car, or
- requires an employee to repay the cost of fuel used for private travel.
Employers can use their own rates which better reflect the circumstances if, for example, a car is more fuel efficient, or if the cost of business travel is higher than the guideline rates.
If an employer pays rates that are higher than the advisory rates and they cannot demonstrate the fuel cost per mile is higher, there is no fuel benefit charge if the mileage payments are solely for miles of business travel. Instead, you will have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.
HMRC have published revised advisory fuel rates for company cars, applying from 1 June 2017. The details can be found via the following link: www.gov.uk/government/publications/advisory-fuel-rates
If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.
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