To reflect the increases in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 July 2008 so employers wishing to use the new rates should advise affected employees and update any expense forms as soon as possible.

Engine size	Petrol	Diesel	LPG
1400cc or less	12p (11p)	13p (11p)	7p (7p)
1401cc – 2000cc	15p (13p)	13p (11p)	9p (8p)
Over 2000cc	21p (19p)	17p (14p)	13p (11p)

HMRC are supposed to give employers a month’s notice of changes the Advisory Fuel Rates (AFR). However according to the HMRC guidance:

‘the recent fuel price increases which justify these AFR changes have happened very rapidly. In these unusual circumstances we are mindful that an implementation date of 1 July might mean that drivers will be incurring higher fuel prices before the new rates become effective. Consequently, where employers are able to do so, HMRC is content for the new rates to be implemented immediately ie from 1 June.’

Other points to be aware of about the advisory fuel rates:

• employers do not need a dispensation to use these rates
• employees driving employer provided cars are not entitled to use them to claim a deduction if employers reimburse them at lower rates. Such claims should be based on actual costs incurred.
• the advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

Internet links: Advisory fuel rates

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