Company cars – advisory fuel rates from 1 March 2014
If an employer provides a car to an employee then a benefit in kind arises. A further benefit arises if the employer pays for the fuel that is used in the car. However, this second benefit can be avoided if an employer reimburses the employee for business travel in the car at a rate which does not exceed the “advisory” rate.
HMRC recalculates this rate quarterly, the latest of which takes effect from 1st March 2014. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.
| Engine Size | Petrol | LPG |
| 1400cc or less | 14p | 9p |
| 1401cc to 2000cc | 16p | 11p |
| Over 2000cc | 24p | 17p |
| Engine Size | Diesel |
| 1600cc or less | 12p |
| 1601cc to 2000cc | 14p |
| Over 2000cc | 17p |
Hybrid cars are treated as either petrol or diesel cars for this purpose.
VAT
HMRC will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.
Claims be Employees
Unlike the published rates for business travel in an employee’s own car, these rates cannot be used in support of a tax reclaim if the employer pays less than the advisory rate.