Company Cars

Advisory Fuel Rates for Company Cars from 1 July 2008

HM Revenue & Customs (HMRC) has agreed to give employers one month's notice of a change in advisory fuel rates so that they can amend their systems in good time to implement the new rates.

However, following the recent and rapid fuel price increases that justify the advisory fuel rate changes, HMRC has said that it understands that an implementation date of 1 July could mean drivers incurring higher fuel prices before the new rates become effective. As a result, HMRC has announced that it is happy for employers to implement the new rates from 1 June where they are able to do so.

Engine Size	Petrol	Diesel	LPG
1400cc or less	12p	13p	7p
1401cc to 2000cc	15p	13p	9p
Over 2000cc	21p	17p	13p

Petrol hybrid cars are treated as petrol cars for this purpose.

These rates are calculated from the fuel prices in the tables below:

Fuel	Engine Size (cc)	Mean MPG	Applied MPG	Fuel Price (per litre)	Fuel Price (per gallon)	Pence per mile	AFR
Petrol	up to 1400	48.9	44.0	114.8	521.8	11.9	12
Petrol	1400-2000	39.5	35.6	114.8	521.8	14.7	15
Petrol	over 2000	27.8	25.0	114.8	521.8	20.9	21

Diesel	up to 2000	50.7	45.7	127.2	578.3	12.7	13
Diesel	over 2000	28.2	34.4	127.2	578.3	16.8	17

LPG	up to 1400	39.1	35.2	57.1	259.6	7.4	7
LPG	1400-2000	28.5	28.5	57.1	259.6	9.1	9
LPG	over 2000	22.2	20.0	57.1	259.6	13.00	13

Notes:

Mean mpg - miles per gallon - from manufacturers information, weighted by annual sales to businesses (Fleet Audits, 2006).
Applied mpg - adjusted downwards by 10 per cent to take account of real driving conditions and lower fuel economy for older cars.
For LPG, mpg is assumed to be 20 per cent lower than for petrol due to lower volumetric energy density.
Department for Business, Enterprise & Regulatory Reform's latest petrol and diesel prices (26 May 2008), LPG from AA website (May 2008).

Will the rate per mile figures change if fuel prices go up or down?

With effect from the January 2008 change, the rates will be reviewed twice a year. Any changes will take effect on 1 January and 1 July but will be published on the HMRC website about one month in advance.

HMRC will also consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates when each review is made and we consider the price change will be sustained.

Employers should make themselves aware of any changes by referring to this page in June and December each year. It is the primary source of information.

VAT

Customs will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.

For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

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