This Bulletin is aimed at company car drivers (and their employers) who are not provided with fuel for private mileage
HM Revenue and Customs (HMRC) have changed their advisory fuel rates for company cars with effect from 1 December 2019. The rates are intended to give guidance to employers about what is an acceptable fuel allowance to reimburse employees for use of fuel, without creating a tax or NIC problem, when on business in their company car.
Where an employer reimburses fuel to an employee using their company car on business, HMRC accepts there is no taxable or NICable benefit as long as the rate paid per mile is no higher than the relevant advisory rate. If, however, the actual cost of the fuel used is in excess of the advisory rate a higher allowance can be paid as long as the employer has detailed records to justify the higher payment.
Where an employer pays for all fuel for a company car but requires an employee to reimburse any private travel, HMRC accepts there is no taxable fuel benefit if the reimbursement is at the appropriate advisory rate, as long as the engine size is 3 litres or less. In exceptional cases, where the engine size is greater than this and the actual cost of fuel is in excess of the advisory rates (and hence an insufficient amount has been reimbursed by the employee), HMRC may argue a higher repayment rate should apply.
It is important to note that, under both circumstances, detailed mileage records should be maintained to substantiate any mileage claim or repayment.
HMRC also now has an Advisory Electricity Rate for fully electric cars, although it should be noted that electricity is not deemed a fuel for car fuel benefit purposes.
Rates and date of change
HMRC review the rates every quarter as follows – on 1 March, 1 June, 1 September and 1 December.
With effect from 1 December the revised advisory rates are as follows:
|1400cc or less||12p||8p|
|1401cc to 2000cc||14p||9p|
|1600cc or less||9p|
|1601cc to 2000cc||11p|
If you would like further information regarding the application of the advisory rates please contact our Assistant Tax Manager, Jamie Poulton.