Advisory fuel rates revised HMRC has revised its fuel only mileage rates, which although having no statutory basis, can be applied in respect of employer provided cars (not company vans) where employees are: Reimbursed in respect of fuel used for business travel; or Required to repay the cost of fuel used for private travel The rates are intended to reflect actual average fuel costs and apply to all journeys undertaken on or after 1st August 2007. The fuel prices used in the computation were 96.6p per litre for petrol, 97.2p per litre for diesel and 46.2p per litre for LPG. The rates will only be altered in the event of a variation in fuel prices of greater than 10%. The revised rates are: Engine size Petrol Diesel LPG 1400cc or less 10p 10p 6p 1401cc to 2000cc 13p 10p 8p Over 2000cc 18p 13p 10p Petrol hybrid cars are treated as petrol cars for this purpose. Employers may make a persuasive case to HM Revenue & Customs (HMRC) for paying higher rates, where employees need to use particular types of car, such as 4x4s, to cover rough terrain. Likewise, where cars in the fleet are fuel efficient, employers may prefer to reimburse employees at lower rates than those advised. If the rate paid for business travel is no higher than the guideline rate for a particular engine size and fuel type of car then no taxable profit or Class 1 NIC liability arises. Where higher rates for business travel are paid, which cannot be substantiated, then any excess is treated as taxable profit and earnings for Class 1 NIC purposes. HMRC will always accept that the advisory rates can be used to calculate the amount that the employee must ‘make good’ for private motoring, where the engine size is three litres or less. Paul Tew, Pay Magazine Snowdrop provides a range of Payroll solutions that are fast, flexible and easy-to-use, to suit the many and varied needs of each organisation. To find out more about the software and services that we provide, please click here >>