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HMRC advisory fuel rates for company car users from1st June

HMRC has published the latest advisory fuel rates (AFR) for company car users, effective from1st June 2021, increasing mileage rates by 1p for all petrol vehicles

Read below to find out more....

The advisory fuel rates that apply from 1st June 2021 have been increased by 1p per mile for petrol and diesel vehicles with engines of 1400-2000cc reflecting a slight increase in fuel prices over the last quarter.

Previous rates, effective March 2021, can be used for up to one month from the date the new rates apply.

The rates only apply in the following circumstances:

  • reimburse employees for business travel in their company cars;

   or

  • require employees to repay the cost of fuel used for private travel.

Reimburse employees for company car business travel

If the mileage rate you pay is no higher than the advisory fuel rates for the engine size and fuel type of the company car, there will be no taxable profit and no Class 1A National Insurance to pay.

If your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates, you can use your own rates to reflect your situation.

If you pay rates that are higher than the advisory rates but cannot show the fuel cost per mile is higher, there will be no fuel benefit charge if the mileage payments are only for business travel. Instead, you’ll have to treat any excess as taxable profit and as earnings for Class 1 National Insurance purposes.

Employees to repay the cost of fuel used for private travel

There will be no fuel benefit charge if you correctly record all private travel mileage and use the correct rate (or higher), to work out how much your employees must repay you for fuel used for private travel.

You will not need to use the advisory rates where you can show that employees cover the full cost of private fuel by repaying at a lower mileage rate.

Advisory fuel rates are worked out from the fuel prices in these tables.

HMRC review rates quarterly on:

  • 1 March

  • 1 June

  • 1 September

  • 1 December

 

 

 

 

 

 

 

Rates

The advisory electricity rate for fully electric cars is 4 pence per mile.

Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.

The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables.

From 1 June 2021

You can use the previous rates for up to 1 month from the date the new rates apply.

To find out more, visit gov.uk

www.orleighfox.co.uk 

Disclaimer: The information contained in this article is intended to be a guide and is not intended to be exhaustive. No action should be taken on the basis of information contained herein without obtaining the necessary advice. No responsibility can be accepted for loss or damages occasioned to any person acting or refraining from acting as a result of the material contained herein.