Advisory fuel rates revised HM Revenue & Customs (HMRC) advisory fuel only mileage rates have been updated to reflect current actual average fuel costs. The rates apply for all journeys undertaken on or after 1 January 2008, but only where employers: reimburse employees for business travel in their company cars (not company vans), or require employees to repay the cost of fuel used for private travel. The rates are not relevant in any other circumstances. The new rates are: Engine size Petrol Diesel LPG 1400cc or less 11p 11p 7p 1401cc to 2000cc 13p 11p 8p Over 2000cc 19p 14p 11p The average fuel prices used in the HMRC calculation were 102.1p per litre for petrol, 106.3p per litre for diesel and 50.2p per litre for LPG. If the amount reimbursed or repaid per mile is calculated as per the appropriate rate for the particular engine size and fuel type of the car, HMRC will accept that there is no tax and NIC liability. The advisory rates will not be binding where an employer can demonstrate that the employee costs do not truly reflect actual average fuel prices. For example, where an employer can show that employees cover the full cost of private fuel by repaying at a lower rate per mile or that the cost of business travel in company cars is higher than the advisory rates, due to the employee having to use particular types of car, such as 4x4s, to cover rough terrain. From January 2008, advisory rates are to be reviewed twice a year, with any changes taking effect on 1 January and 1 July. HMRC will also consider amending the rates if fuel prices vary by 5% during each six month period. HMRC are committed to publishing updates about one month in advance of any change, visit http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm. 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 >>